DEFENSE HEALTH 

CARE

TRICARE Dental 

Services Contracts’ 

Requirements and 

Structure

Report to the Committee on Armed 

Services, U.S. Senate

June 2014

GAO-14-497

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-497, a report to the 

Committee on Armed Services, U.S. Senate

June 2014

DEFENSE HEALTH CARE

TRICARE Dental Services Contracts’ Requirements 

and Structure

Why GAO Did This Study

DOD offers comprehensive health care 

coverage to millions of beneficiaries 

through TRICARE, a system of health 

care that DOD purchases from private 

insurers to supplement the health care 

that DOD provides through its military 

and dental treatment facilities (DTF). 

Purchased dental services are 

provided through separate programs 

for different groups of beneficiaries: 

(1) the ADDP provides dental care to 

active duty servicemembers who do 

not have ready access to a DTF; 

(2) the TDP provides dental insurance 

to eligible dependents of active duty 

servicemembers, and to National 

Guard and Reserve members and their 

dependents; and (3) the TRDP 

provides dental insurance to retired 

uniformed service members and their 

dependents. DHA is responsible for 

awarding, administering, and 

overseeing contracts with private 

insurers for these programs.

Senate Report 112-173, which 

accompanied the Senate Committee 

on Armed Services’ version of the 

National Defense Authorization Act for 

fiscal year 2013, mandated that GAO 

review DOD’s private sector care 

contracts, including its contracts for 

dental services. GAO examined 

(1) how DHA developed the 

requirements for its current dental 

services contracts and (2) the reasons 

for DHA’s use of separate contracts for 

different beneficiary groups. GAO 

reviewed relevant laws, regulations, 

and DOD contracts and acquisition 

planning documents. GAO also

interviewed DHA officials and other 

stakeholders.

GAO made no recommendations.

What GAO Found

To develop requirements for its current dental services contracts, officials from 

the Department of Defense’s (DOD) Defense Health Agency (DHA) analyzed 

market research, data from contractors’ past performance, legislation, 

independent cost estimates, and other information. DHA officials used this 

information to align the contracts’ requirements with contract goals to deliver high 

quality dental services in a cost effective manner and to facilitate access to care.

• Market research: DHA officials gathered information through market research 

and analyzed it to determine the capabilities within the dental services 

market to satisfy the agency’s needs. 

• Performance monitoring: DHA officials analyzed information about 

contractors’ past performance, including claims payment data, to assess and 

revise contract requirements.

• Legal requirements: DHA officials reviewed laws relevant to each dental 

services contract to identify changes required by statute.

• Independent cost estimates: DHA officials reviewed cost estimates for new 

benefit requirements they were considering for the TRICARE Retiree Dental 

Program (TRDP) and TRICARE Dental Program (TDP) contracts to assess 

cost efficiency. 

• Other sources of information: DHA officials reviewed lessons learned from 

previous procurements, current dental services contract requirements, and 

dental best practices and changes in the professional practice of dentistry.

DHA uses separate contracts for different beneficiary groups in part because the 

programs that serve them are funded differently. The TRDP contract is separate 

from the TRICARE Active Duty Dental Program (ADDP) and the TDP contracts 

because the government does not contribute any funds for the TRDP, but does 

contribute funds for the ADDP and TDP. To provide assurance that government 

funds are not expended for the TRDP, contractors said they would have to 

operate the programs separately. As a result, DHA officials determined that there 

would be minimal cost savings from combining contracts. Differences in how the 

ADDP and TDP programs are funded also influenced DHA’s decision to use 

separate contracts for these programs. DOD pays all costs for necessary care 

provided to active duty servicemembers through the ADDP. In contrast, the TDP 

is an insurance program: DOD and TDP beneficiaries share in the costs of 

premiums, which are paid to the contractor; the contractor is at risk for payment 

to providers. DHA officials concluded that the disadvantages of combining these 

two contracts outweighed the potential advantages. Other factors that contributed 

to DHA’s decision to use separate contracts for different beneficiary groups 

included differences in program purposes, dental services, and network access 

standards.

In comments on a draft of this report, DOD agreed with its findings and provided 

a technical comment, which was incorporated. 

View GAO-14-497. For more information, 

contact Vijay A. D'Souza at (202) 512-7114 or 

dsouzav@gao.gov.
Page i GAO-14-497 TRICARE Dental Services Contracts

Letter 1 

Background 3

DHA Analyzed Market Research, Performance Data, and Other 

Information in Developing Dental Services Contract 

Requirements 9

DHA Uses Separate Contracts Because of Funding Differences 

and Other Factors 13

Agency Comments 17

Appendix I Comments from the Department of Defense 18

Appendix II GAO Contact and Staff Acknowledgments 19

Table

Table 1: TRICARE Dental Services Contracts 6

Figure

Figure 1: Selected Phases and Activities in the Defense Health 

Agency’s Acquisition Process 7

Contents
Page ii GAO-14-497 TRICARE Dental Services Contracts

Abbreviations

ADDP Active Duty Dental Program

DFARS Defense Federal Acquisition Regulation Supplement

DHA Defense Health Agency

DOD Department of Defense

DTF dental treatment facility

FAR Federal Acquisition Regulation

FEDVIP Federal Employee Dental and Vision Insurance Program

NDAA National Defense Authorization Act

OPM Office of Personnel Management

RFI request for information

RFP request for proposals

TDP TRICARE Dental Program

TRDP TRICARE Retiree Dental Program

VA Department of Veterans Affairs

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Page 1 GAO-14-497 TRICARE Dental Services Contracts

441 G St. N.W.

Washington, DC 20548

June 13, 2014

The Honorable Carl Levin

Chairman

The Honorable James M. Inhofe

Ranking Member

Committee on Armed Services

United States Senate

In fiscal year 2012, the Department of Defense’s (DOD) military health 

system offered comprehensive health care coverage to nearly 9.7 million 

eligible beneficiaries through its TRICARE programs, with more than 

4.6 million beneficiaries enrolled for TRICARE dental services. TRICARE 

is a system of health care that DOD purchases from private insurers to 

supplement the health care that DOD provides through its military 

treatment facilities and dental treatment facilities (DTF). The purchased 

dental services are provided through separate programs for different 

groups of beneficiaries: (1) the TRICARE Active Duty Dental Program 

(ADDP), which provides dental care to active duty servicemembers who 

require care not available from a DTF or who do not have ready access to 

a DTF; (2) the TRICARE Dental Program (TDP), which provides dental 

insurance to eligible dependents of active duty servicemembers, and to 

National Guard and Reserve members and their dependents;1 and (3) the 

TRICARE Retiree Dental Program (TRDP), which provides dental 

insurance to retired uniformed servicemembers and their dependents. 

DOD’s Defense Health Agency (DHA) is responsible for awarding, 

administering, and overseeing contracts with private insurers for these 

programs.2

 

1

The units and members of the Army National Guard of the United States and of the Air 

National Guard of the United States are in the Ready Reserve of the Army and the Ready 

Reserve of the Air Force, respectively. 10 U.S.C. § 10145(b).

2

Beginning on Oct. 1, 2013, responsibilities for the TRICARE program were transitioned 

from the TRICARE Management Activity, which was terminated on that date, to the DHA. 

In this report, we use the term DHA to cover both its current responsibilities and those that 

were previously assigned to TRICARE Management Activity. For additional information 

about the establishment of DHA, see GAO, Defense Health Care Reform: Additional 

Implementation Details Would Increase Transparency of DOD’s Plans and Enhance 

Accountability, GAO-14-49 (Washington, D.C.: November 2013).
 

Page 2 GAO-14-497 TRICARE Dental Services Contracts

Senate Report No. 112-173, which accompanied the Senate Committee 

on Armed Services’ version of the National Defense Authorization Act 

(NDAA) for fiscal year 2013, mandated that we review DOD’s private 

sector health care contracts, including its contracts for dental services.3

1. How DHA developed the requirements for its current dental services 

contracts.

This report describes:

2. The reasons for DHA’s use of separate contracts for different 

beneficiary groups.

To address these objectives, we reviewed relevant laws, regulations, and 

DOD documents. Specifically, we reviewed DOD documents related to 

the acquisition of dental services—including the TRICARE dental services 

contracts, acquisition plans and strategies, documentation of market 

research, and requests for proposals (RFP)4

—and compared them to 

requirements for acquisition planning included in the Federal Acquisition 

Regulation (FAR) and the Defense Federal Acquisition Regulation 

Supplement (DFARS).5

 

3

S. Rep. No. 112-173, at 131-32 (2012). For our work on TRICARE pharmacy service 

contracts, see GAO, Defense Health Care: Evaluation of TRICARE Pharmacy Services 

Contract Structure Is Warranted, 

In addition, we interviewed DHA officials to learn 

more about these programs. We also interviewed dental service 

contractors and other stakeholders including the American Dental 

Association, the Military Officers Association of America, the Reserve 

Officers Association, and the National Military Family Association, to 

GAO-13-808 (Washington, D.C.: September 2013). For 

our work on TRICARE managed care support contracts, see GAO, Defense Health Care: 

Acquisition Process for TRICARE’s Third Generation of Managed Care Support Contracts, 

GAO-14-195 (Washington, D.C.: March 2014).

4

RFPs include descriptions of the contract requirements, the anticipated terms and 

conditions that will be contained in the contract, the information that the prospective 

offerors must include in their proposal, and the factors that will be used to evaluate the 

proposal.

5

The FAR defines uniform policies for the acquisition of supplies and services across the 

federal government. The FAR System is codified in title 48 of the Code of Federal 

Regulations. The DFARS defines uniform policies for the acquisition of supplies and 

services for DOD that supplement the FAR, and delegates authorities for deviations from 

the FAR requirements. In general, agencies may grant deviations from the FAR when 

necessary to meet the specific needs and requirements of each agency, unless precluded 

by law, executive order, or regulation. See FAR § 1.402.
 

Page 3 GAO-14-497 TRICARE Dental Services Contracts

obtain their perspectives on DOD’s approach to the acquisition of dental 

services. 

We conducted this performance audit from August 2013 to June 2014 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.

Dental care is a key component of the health care services provided by 

the military to active duty servicemembers, and a key benefit provided to 

those who are eligible to enroll for health care coverage through 

TRICARE. DHA’s TRICARE Dental Care Office administers and oversees 

the TRICARE dental care programs.

The ADDP supplements the dental services available to active duty 

servicemembers through DTFs with the goal of maintaining readiness for 

deployment.6

Active duty servicemembers may obtain necessary dental care at no cost 

to them at a DTF or through the ADDP. The majority of active duty 

servicemembers’ dental care is provided in DTFs, which are staffed with 

Active duty servicemembers are required to have a dental 

examination annually, during which their dental readiness is assessed. 

Dental readiness is a prerequisite for deployment and must be maintained 

among servicemembers who have been deployed.

 

6

Active duty servicemembers who are on continuous active duty orders for more than 

30 days are eligible to receive ADDP dental coverage, subject to certain requirements and 

limitations provided in the ADDP. The ADDP serves active duty servicemembers of the 

Army, the Navy, the Air Force, the Marine Corps, the Coast Guard, and the 

Commissioned Corps of the National Oceanic and Atmospheric Administration. Others 

who are eligible for the ADDP include members of the Reserves and National Guard who 

serve on continuous active duty for more than 30 days, Reserve Component members 

discharged after serving more than 30 days on active duty in support of a contingency 

operation, and others as specified in statute. See 10 USC § 1074(c)(1).

Background

TRICARE Dental Care 

Programs

The TRICARE Active Duty 

Dental Program
 

Page 4 GAO-14-497 TRICARE Dental Services Contracts

general dentists and, in some cases, dental specialists.7 If a necessary 

service cannot be provided in a timely way through an accessible DTF, 

the servicemember may obtain dental care from a private dentist through 

the ADDP.8 To facilitate reasonable access to care, the ADDP includes a 

network of dental care providers throughout the United States and its 

territories.9

ADDP is not an insurance program, and active duty servicemembers do 

not pay premiums for their dental care, do not share in the costs of the 

care, and do not face any annual or lifetime maximums on the cost of that 

care. Prior to establishing the ADDP, DOD paid the full cost of necessary 

dental care provided to active duty servicemembers who were referred to 

private dentists, and the prices for such privately provided dental services 

were uncontrolled. By negotiating standard prices for dental services with 

a private insurance carrier, the ADDP was intended to contain the costs 

of providing necessary care to active duty servicemembers.

The TDP is a dental insurance program that is available to dependents of 

active duty servicemembers, and to members of the National Guard and 

 

7

DOD officials told us that as of April 2014, DOD had 403 DTFs worldwide. DHA officials 

told us that the number fluctuates from month to month and has been declining due, in 

part, to a reduction in forces.

8

Active duty servicemembers may be referred for treatment through the ADDP if a nearby 

DTF cannot provide routine dental care within 21 days or specialty dental care within 

28 days. Active duty servicemembers with a duty location and residence greater than 

50 miles from a DTF are automatically eligible for the ADDP and may obtain care through 

the ADDP without a referral from a DTF, although pre-treatment authorization is required 

under certain circumstances. Authorization is required for non-emergency treatments 

costing more than $750 per procedure or appointment, for treatment plans that are 

expected to cost $1,500 or more within a consecutive 12-month period, and for certain 

specialty procedures.

9

The contractor’s network of providers covers the United States, District of Columbia, U.S. 

Virgin Islands, Guam, Puerto Rico, American Samoa, and the Northern Mariana Islands. 

Active duty servicemembers who are deployed in other locations around the world may 

obtain dental care services through a separate program, the TRICARE Overseas 

Program, which is the broad DOD health care program that supplements care provided by 

military and dental treatment facilities outside of the United States and its territories. 

Because the TRICARE Overseas Program is primarily a health care program, rather than 

a dental services program, it was not within the scope of our work.

The TRICARE Dental Program
 

Page 5 GAO-14-497 TRICARE Dental Services Contracts

Reserve and their dependents.10

• 100 percent of the premiums of survivors of active duty 

servicemembers who died while on active duty and to eligible 

dependents of certain Reserve members;

Enrollees are responsible for costsharing premiums, certain procedure fees, and costs above annual and 

lifetime maximums. Enrollees’ share of premiums varies with the status of 

the enrollee. For example, DOD pays:

• Up to 60 percent of the premiums of the dependents of active duty 

service members and of certain Reserve members; and

• 0 percent of the premiums of certain Reserve members who are not 

on active duty and their dependents.

The TRDP is a dental insurance program that is available to retired 

uniformed service members and their dependents.11

For information about the contracts for these programs, see table 1.

DOD does not 

contribute to paying the costs of this program. Enrollees are responsible 

for the full premium, any cost-sharing fees, and costs above the annual 

and lifetime maximums.

 

10The TDP offers coverage to eligible dependents of uniformed service active duty 

personnel, and to members of the Selected Reserve and Individual Ready Reserve and 

their eligible dependents. Active duty servicemembers, disabled veterans, foreign 

personnel, and retirees and their families are not eligible for the TDP. See 10 USC 

§§ 1076a, 10143, 10144(a), and 10144(b). The TDP provides worldwide coverage.

11The TRDP offers coverage to eligible personnel who retired from the uniformed 

services, certain unremarried surviving spouses, certain dependents of retirees, and 

former members of the armed forces who are Medal of Honor recipients and their 

immediate dependents. See 10 USC § 1076c. The TRDP currently includes two 

programs: a basic program, which is closed to new enrollees (except for the addition of a 

dependent), and a more expensive enhanced program. The basic program offers 

coverage within the U.S. and its territories and in Canada; the enhanced program offers 

coverage worldwide.

In addition, eligible veterans may qualify for certain dental care services through the 

Department of Veterans Affairs (VA). For example, veterans who have certain dental 

conditions that are connected to their military service and veterans who were prisoners of 

war are eligible to receive any dental care they need from the VA. In addition, veterans 

who have a dental condition that aggravates a medical condition that resulted from their 

military service are eligible for treatment of that dental condition. Eligible veterans may 

also enroll in a dental insurance program through the VA.

The TRICARE Retiree Dental 

Program
 

Page 6 GAO-14-497 TRICARE Dental Services Contracts

Table 1: TRICARE Dental Services Contracts

TRICARE Program

Contract information ADDP TDP TRDP

Contractor United Concordia 

Companies, Inc.

Metropolitan Life Insurance 

Company, Inc.

Delta Dental of California

Approximate number of beneficiaries 

as of March 2014

1.4 million 1.8 million a 1.4 million

Effective date Dec. 2, 2013 Feb. 1, 2011 Jan. 2, 2013

End date July 31, 2019 b Jan. 31, 2017 Dec. 31, 2018

Estimated cost to DOD $728 million c $1.9 billion $0

Estimated value for the contractor $728 million c $3.1 billion $2.6 billion

Source: GAO analysis of information from the Defense Health Agency (DHA). | GAO-14-497

Note: The TRICARE dental programs include the Active Duty Dental Program (ADDP), the TRICARE 

Dental Program (TDP), and the TRICARE Retiree Dental Program (TRDP). 

a

The approximate number of ADDP beneficiaries is the entire active duty force.

b

Each contract includes a base interval and five option periods. End dates assume that all option 

periods will be executed.

c

The estimated costs and values are those at the time the contract was awarded, assuming that all 

option periods would be executed. Differences between the estimated cost to the Department of 

Defense (DOD) and the estimated value for the contractor reflect contributions from beneficiaries.

The acquisition process for DHA’s dental services contracts includes 

three main phases, each of which are governed by federal and 

department-level requirements.12

 

12In addition to federal regulations (including the FAR and DFARS), DOD and DHA issue 

other manuals, policies, and guidance to assist in the acquisition process.

The phases include (1) acquisition 

planning, (2) RFP, and (3) award. (See fig. 1.)

Dental Services 

Acquisition Process
 

Page 7 GAO-14-497 TRICARE Dental Services Contracts

Figure 1: Selected Phases and Activities in the Defense Health Agency’s Acquisition Process

Acquisition Planning. Federal regulations require agencies to perform 

acquisition planning activities for all contracts to ensure that the 

government meets its needs in the most effective, economical, and timely 

manner possible. In the acquisition planning phase, DHA officials are to 

develop a strategy and plan to define and fulfill contract requirements in a 

timely manner and at a reasonable cost. Federal regulations also require 

that acquisition planning include market research, which can involve the 

development and use of requests for information (RFI).13 An internal 

working group consisting of a dental program manager, contracting 

officer, contracting officer’s representatives, and a requirements specialist 

review information gathered during the acquisition planning process to 

determine contract requirements, according to DHA officials.14

RFP. In the RFP phase, DHA officials issue the RFP and receive 

proposals.

Award. In the award phase, DHA officials are responsible for evaluating 

the proposals and awarding the contract to the offeror presenting the best 

 

13Market research is the collection and analysis of information about capabilities within the 

market to satisfy the agency’s needs. See FAR § 10.001(a) and DFARS § 210.001(a). 

RFIs are publically released documents that allow the government to obtain feedback from 

potential contractors on various acquisition elements, such as the terms and conditions of 

the contract and the feasibility of potential new contract requirements. 

14Contracting officer’s representatives are senior technical experts designated by the 

contracting officer to serve as a liaison between the contracting officer and contractors.
 

Page 8 GAO-14-497 TRICARE Dental Services Contracts

value to the government based on a combination of technical, cost, and 

performance-based factors.

After the contract is awarded, the contracting officer’s representative is 

responsible for the day-to-day monitoring of contractor activities to ensure 

that the services are delivered in accordance with the contract’s 

performance standards. Each dental service contract includes quality 

assurance standards for provider access, claims processing, and 

customer service (telephone coverage and correspondence timeliness) 

against which the contractor’s performance is assessed. Contractors are 

required to meet these standards. Although DHA officials use a variety of 

methods to monitor contractors’ performance, the primary method of 

monitoring performance is through monthly reports submitted by each 

contractor to DHA.15

 

15Each contract includes a contract data requirements list that describes the type of data 

the contractor must submit to DHA and the frequency with which it must be submitted. In 

addition, each dental services contract specifies that the contractor is accountable for 

assuring that reports submitted to DHA contain accurate and complete data. Moreover, 

the contractor must describe its procedures for collecting and preparing the data, and all 

reports must be supported with sufficient documentation. In addition to reviewing monthly 

reports, DHA officials may monitor contractor performance through contractor on-site 

observations; review of data reported by the contractor; and audits of contractor records, 

such as processed claims data.

Performance Monitoring
 

Page 9 GAO-14-497 TRICARE Dental Services Contracts

To develop requirements for each of its current dental services contracts, 

DHA officials analyzed market research, data from contractors’ past 

performance, legislation, independent cost estimates, and other 

information.16 DHA officials used this information to align the contracts’ 

requirements with contract goals to deliver high quality dental services in 

a cost effective manner, and to facilitate access to care.17

Market Research. As part of its development of contract requirements, 

DHA officials gathered information through market research and analyzed 

it to determine the capabilities within the dental services market to satisfy 

the agency’s needs. DHA’s market research included soliciting 

information from current and potential dental services contractors. To do 

this, DHA officials issued RFIs and draft RFPs for comment.18

 

16These activities were detailed in DHA’s acquisition plans for each contract. The FAR 

requires that the acquisition plan address all the technical, business, management, and 

other significant considerations that will control the acquisition, but the specific content of 

a plan will vary. FAR §7.105. The acquisition plans also described the need for dental 

services and the goals of each contract, among other things.

These 

documents included questions related to potential benefit changes—such 

as how the offeror would implement a specific benefit—and potential data 

requirements—such as how the offeror would submit required data to 

DHA. In addition to RFIs and draft RFPs, DHA’s market research 

17As required by 10 U.S.C. § 1073a, award of TRICARE contracts is done on the basis of 

best value to the United States to the maximum extent consistent with furnishing high 

quality health care in a manner that protects the fiscal and other interests of the United 

States. All of the contracts included these goals, but varied somewhat in how they were 

stated in the acquisition plan or final contract. For example, the acquisition plan for TRDP 

and the final contract for TDP stated that the objectives of the contract were to deliver high 

quality dental services in a cost effective manner, while the acquisition plan for the ADDP 

stated that the goals of the contract were to provide needed care to maintain dental 

readiness and deployability within a reasonable cost structure.

18Although DHA is not required to use them, RFIs are considered a best practice for 

service acquisition in the federal government. RFIs allowed DHA to assess the capability 

of the market to meet requirements that DHA was considering for each new contract. See, 

for example, Office of Management and Budget, Office of Federal Procurement Policy, 

“Myth-Busting”: Addressing Misconceptions to Improve Communication with Industry 

During the Acquisition Process, Memorandum for Chief Acquisition Officers, Senior 

Procurement Representatives, Chief Information Officers (Washington, D.C.: Feb. 2, 

2011), and Office of Management and Budget, Office of Federal Procurement Policy, 

“Myth-Busting 2”: Addressing Misconceptions and Further Improving Communication 

During the Acquisition Process, Memorandum for Chief Acquisition Officers, Senior 

Procurement Representatives, Chief Information Officers (Washington, D.C.: May 7, 

2012).

DHA Analyzed Market 

Research, 

Performance Data, 

and Other Information 

in Developing Dental 

Services Contract 

Requirements
 

Page 10 GAO-14-497 TRICARE Dental Services Contracts

activities included one-on-one meetings with dental services 

contractors.19

DHA officials used information from these market research activities to 

revise contract requirements. For example, according to DHA officials, 

feedback from contractors indicated that DOD’s contract requirements 

related to information security were costing dental contractors (and DOD) 

a substantial amount of money. Partly as a result of contractors’ 

feedback, DHA determined that it would be more economical for 

contractors to comply with the information security standards used in the 

commercial sector, according to these officials. In all three new contracts, 

DHA officials therefore required contractors to comply with commercial 

information security requirements instead of those developed by DOD.

DHA officials also used market research to determine the technical 

feasibility of potential contract requirements. For example, after 

encountering delays in treatment preauthorization decisions due to poor 

quality radiographs (commonly known as x-rays), the RFI that DHA 

issued for the ADDP contract included questions to determine the 

feasibility of the electronic submission of radiographs. According to DHA 

officials, dental technology has progressed to allow for easy electronic 

submission of this data, resulting in better radiograph quality. Partly as a 

result of information collected through the RFI, DHA officials incorporated 

a requirement into the new ADDP contract for the contractor to submit 

radiographs electronically when requesting pretreatment authorization 

from DHA. This requirement was intended to increase the quality of the 

diagnostic information and thus DHA’s efficiency in making 

preauthorization decisions.

Performance Monitoring. DHA officials analyzed information about 

contractors’ past performance, including contractors’ monthly reports and 

claims payment data, to assess and revise contract requirements for 

future contractors. DHA uses a variety of methods to monitor 

performance, primarily relying on their review of monthly reports 

submitted by each contractor to DHA, which reflect how well the 

contractor is performing against the performance standards. They use 

 

19Dental services contractors told us that, in comparison to industry forums conducted by 

DHA and attended by multiple contractors, one-on-one meetings with DHA officials during 

the market research process resulted in a greater willingness among contractors to 

discuss their concerns and ideas.
 

Page 11 GAO-14-497 TRICARE Dental Services Contracts

this information to assess and revise requirements for each future dental 

services contract. For example, according to DHA officials, before issuing 

the RFP for the current TRDP contract, DHA officials’ review of the then 

current TRDP contractor’s performance against the existing contract’s 

network access standard indicated that the contractor consistently 

exceeded the standard. As a result, DHA raised the network access 

standard in the new TRDP contract from 90 to 99 percent, thus requiring 

that 99 percent of enrollees living within the United States, District of 

Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands have access to 

a network general dentist within a specified distance of their primary 

residence.20

DHA officials also used other performance monitoring information, such 

as claims payment data submitted by contractors, when developing 

contract requirements. For example, DHA officials’ review of the ADDP 

contractor’s claims payment data confirmed reports they received from 

DTFs that some servicemembers were being treated twice (and DHA paid 

more than they would have otherwise) for the same dental problem 

because they were treated by general dentists, not dental specialists, and 

the initial treatment was not successful, according to DHA officials. Partly 

as a result of their review of this information, DHA officials incorporated a 

new requirement in the new ADDP contract that requires that 90 percent 

of all DTF-referred endodontic procedures (such as root canals) or oral 

surgeries be completed by an endodontist or oral surgeon, respectively.21

Legal requirements. DHA officials reviewed laws relevant to each dental 

services contract to identify changes required by statute. DHA officials 

used the information to determine whether any changes to the benefit or 

eligibility structures of the contracts would be required. For example, DHA 

added a survivor benefit to the TDP contract as a result of a legislative 

change. In addition, the Transition Assistance Management Program, 

 

20DHA included a 95 percent network access standard in the RFP; however, the 

successful offeror proposed a higher network access standard in response to the RFP and 

that higher standard was incorporated into the final contract. The TRDP network access 

standard does not apply to all areas in which dental services are covered.

21In the RFP, DHA included a requirement that 85 percent of all DTF-referred endodontic 

procedures be completed by endodontists and 80 percent of all DTF-referred oral 

surgeries be completed by oral surgeons; however, the successful offeror proposed a 

higher standard in response to the RFP and that higher standard was incorporated into 

the final contract.
 

Page 12 GAO-14-497 TRICARE Dental Services Contracts

which provides 180 days of premium-free transitional health care benefits 

after regular TRICARE benefits end, was added to the ADDP contract as 

a result of a legislative change.

Independent Cost Estimates. DHA officials reviewed independent cost 

estimates for new benefit requirements they were considering to assess 

cost efficiency. Specifically, prior to incorporating new benefit 

requirements into the TRDP and TDP contracts, DHA obtained and 

reviewed cost estimates from a private consulting firm to determine the 

impact of these benefits on enrollees’ monthly premiums. For example, 

DHA requested cost estimates for increasing the TDP contract’s 

maximum lifetime orthodontic benefit requirement from $1,500 to $1,750 

and from $1,500 to $2,000.22

Other Sources of Information. Other sources of information DHA 

officials reviewed prior to determining whether to add, change, or 

eliminate requirements from their dental service contracts included

The estimates indicated that monthly 

premiums would increase 65 cents and $1.30, respectively. Based in part 

on the cost estimate, DHA increased the benefit requirement in the final 

TDP contract so that the contractor must provide coverage for benefits up 

to $1,750. According to DHA officials, they do not incorporate benefits if 

doing so would result in large increases in monthly premiums.

• Lessons learned from previous procurements for other health 

services. We previously reported that DHA incorporated lessons 

learned into the RFP for the dental services contracts as a result of 

challenges to DHA’s contract award decisions for certain managed 

care support contracts.23 Specifically, in drafting the RFP for the TDP 

contract, officials more clearly defined how DHA officials planned to 

assess the evaluation factors when awarding the contract.24

 

22Senate Armed Services Committee Report No.111-035, which accompanied NDAA for 

fiscal year 2010, directed the Secretary of Defense to examine the costs and levels of 

coverage available through the TDP, and to consult with beneficiary organizations on 

needed improvements; in particular, for coverage for orthodontics.

23An offeror that was not awarded a contract may challenge a federal agency’s award or 

proposed award of a contract based on an alleged violation of statute or regulation. Such 

a challenge is known as a post-award bid protest.

24See GAO-14-195. 
 

Page 13 GAO-14-497 TRICARE Dental Services Contracts

• Current dental services contract requirements. DHA officials told us 

that they review current contract requirements and solicit feedback on 

them from stakeholders, including officials from various branches of 

the military and organizations representing beneficiaries, before each 

new solicitation.25

• Dental best practices and changes in the professional practice of 

dentistry. DHA officials review industry best practices and changes in 

the practice of dentistry to determine new contract requirements. For 

example, when developing new benefits for the current TDP contract, 

DHA officials researched common dental insurance benefits and best 

practices and solicited feedback from the American Dental 

Association’s Council on Government Affairs. In addition, DHA 

officials told us that they used their knowledge of changes in the field 

of dentistry, including dentistry’s increased use of digital technology, 

to help them identify the electronic submission of radiographs as a 

potential solution to the previously discussed problem of poor 

radiograph quality.

For example, DHA officials conducted a forum with 

military services officials through which they identified potential new 

requirements for the ADDP contract, including a referral tracking 

system that would indicate authorized care that was not completed 

and thereby allow military commanders ready access to information 

about servicemembers’ dental readiness. As a result of this and other 

information they reviewed, the new ADDP contract required the 

contractor to develop a referral tracking system and train DHA staff on 

its use.

DHA uses separate contracts for different beneficiary groups, in part, 

because the programs that serve them are funded differently. For 

example, the TRDP contract is separate from the ADDP and the TDP 

contracts because the government does not contribute any funds for the 

TRDP, but does contribute funds for the ADDP and TDP. Other factors 

that contributed to DHA’s decision to use separate contracts for its 

different beneficiary groups included differences between programs, such 

as differences in their purposes, covered dental services, and network 

access standards.

 

25Beneficiary groups with whom we spoke told us that DHA had made changes to 

program benefits that were responsive to beneficiaries’ needs.

DHA Uses Separate 

Contracts Because of 

Funding Differences 

and Other Factors
 

Page 14 GAO-14-497 TRICARE Dental Services Contracts

To provide assurance that government funds are not expended for the 

TRDP, the administrative costs associated with the TRDP must be kept 

separate from the administrative costs associated with governmentfunded programs. DHA officials told us that they discussed this issue with 

potential contractors, who said that they would have to operate the 

programs separately. DHA officials determined that there would be 

minimal cost savings or efficiencies from combining contracts under these 

circumstances.26

Because the TRDP is not directly supported by DOD funds, DHA is 

exploring the possibility of shifting the option for military retirees to 

purchase dental insurance, which is currently provided through the TRDP, 

to the Federal Employee Dental and Vision Insurance Program (FEDVIP), 

which is administered by the Office of Personnel Management (OPM).27

• lowering the workload of staff within the TRICARE Dental Care Office, 

thereby allowing them to devote more of their time to administering 

and overseeing the remaining two programs; and

Unlike the TRDP, the FEDVIP allows enrollees to select from among 

several plan options. DHA and OPM are in the preliminary process of 

determining the viability of this plan. DHA officials said that this option has 

both advantages and disadvantages. The primary advantages would 

include:

• allowing retirees greater flexibility to choose among insurance plans 

that differ in their premiums and coverage options.

The primary disadvantages of shifting the option to purchase dental 

insurance to the FEDVIP would include:

 

26We previously reported that sound acquisition planning includes an assessment of 

lessons learned to identify improvements, as well as a comparative evaluation of the costs 

and benefits of alternatives. See GAO, Acquisition Planning: Opportunities to Build Strong 

Foundations for Better Services Contracts, GAO-11-672 (Washington, D.C.: August 

2011), and GAO, Cost Estimating and Assessment Guide: Best Practices for Developing 

and Managing Capital Program Costs, GAO-09-3SP (Washington, D.C.: March 2009).

27The Federal Employee Dental and Vision Benefits Enhancement Act of 2004 provided 

OPM with the opportunity to establish arrangements under which dental and vision 

benefits are made available to federal employees, retirees, and their dependents. Eligible 

employees and annuitants can choose among four nationwide and three regional dental 

insurance plans. These benefits are available on an enrollee-pay-all basis. This program 

allows dental insurance to be purchased on a group basis, which means competitive 

premiums and no pre-existing condition limitations for enrollment.

TRDP Contract
 

Page 15 GAO-14-497 TRICARE Dental Services Contracts

• the loss, for retirees, of the increased ease in use that results from 

similarities that have been built into the various TRICARE programs, 

such as similarities across programs in educational materials;

• potentially higher premiums if the enrollee selects a plan with more 

extensive dental benefits; and

• potential resistance to the change among military retirees.

DHA officials told us that it is too soon to determine whether it would be 

possible to shift the TRDP to the FEDVIP. If it is found to be a viable 

option, legislative action would be necessary for OPM to open the 

FEDVIP to military retirees and for DOD to terminate the TRDP.

Among other factors, differences in how the ADDP and TDP programs 

are funded also influenced DHA’s decision to use separate contracts for 

these programs. For example, DOD pays all costs for necessary care 

provided to active duty servicemembers through the ADDP upon receipt 

of invoices for individually priced services. In contrast, the TDP is an 

insurance program: DOD and TDP beneficiaries share in the costs of 

premiums, which are paid to the contractor; and the contractor is at risk 

for payment to providers. Thus, unlike the ADDP contractor, the TDP 

contractor bears the risk of loss if total costs through the program are 

greater than predicted. (If total costs are lower than predicted, the 

contractor would earn a larger profit than expected.)

DHA officials told us that they consulted with potential contractors to 

identify advantages and disadvantages of merging the ADDP and TDP 

contracts and they concluded that the disadvantages of combining these 

two contracts, which are largely due to the differences in funding, 

outweighed the potential advantages.28

 

28The TDP developed out of a program called the Basic Active Duty Dependents Dental 

Benefit Plan, which was implemented in 1987. When the ADDP was established in 2008, 

DHA officials decided to keep it separate from the previously established TDP to avoid 

extending the TDP contract on a sole-source basis until the agency was ready to procure 

ADDP services. While federal statute and acquisition regulations generally require that 

contracts be awarded on the basis of full and open competition, they also permit federal 

agencies to award noncompetitive contracts in certain circumstances, for example, when 

only one vendor can supply the requirements or when a sole-source award is made under 

specified small business programs. Generally, noncompetitive contracts must be 

supported by written justifications and approvals that address the specific exception to full 

and open competition that is being applied to the procurement. See, for example, GAO, 

Defense Contracting: Actions Needed to Increase Competition, 

The potential advantages of 

GAO-13-325 (Washington, 

D.C.: March 2013).

ADDP and TDP Contracts
 

Page 16 GAO-14-497 TRICARE Dental Services Contracts

combining the contracts that DHA officials and contractors identified 

included:

• enhanced continuity of care when individuals switch from reserve to 

active duty;

• fewer instances in which two contractors would need to work together 

to reconcile payments when an error has been made about whether 

someone is on active or reserve duty because a single contractor 

would be responsible for both programs;

• greater leverage in fee negotiations because the pool of potential 

enrollees would be larger; and

• slight gains in the efficiency of contract administration, particularly for 

monitoring contractors’ performance, thereby allowing TRICARE 

Dental Care Office staff more time to devote to their other 

responsibilities.

The potential disadvantages of combining the contracts that DHA officials 

and contractors identified included:

• a reduction in competition if carriers do not want to participate in one 

or the other program, do not want to manage two different programs 

simultaneously under the same contract, or do not want to undertake 

a contract of the resultant size;

• greater difficulty in selecting the best contractor to award the contract, 

as one offer may be a better match for the ADDP requirements and 

another offer a better match for the TDP requirements;

• the potential for confusion among beneficiaries, dentists, and 

contractor staff because of differences between the programs (such 

as different benefits and payment requirements); and

• the potential for a compromise on quality if the contractor is not able 

to meet the requirements of both programs simultaneously and well. 

In the past, there was an interval during which a single contractor held 

both the ADDP and TDP contracts, and DHA officials told us that 

there were problems with this arrangement, including obstacles to 

care; operational challenges; and confusion among beneficiaries, the 

contractor, and the military DTFs. They said that these problems 

negatively affected both the delivery of dental care and the reputation 

of the military health system.
 

Page 17 GAO-14-497 TRICARE Dental Services Contracts

Having just awarded the ADDP contract, DHA officials stated that they 

are not exploring options for combining these contracts. They noted that 

the government would have to either terminate the ADDP contract early 

or sole-source the TDP contract to extend it until the ADDP contract 

expires. They also stated that having to re-solicit a contract would be 

inefficient.

We requested comments on a draft of this product from DOD. In its 

written comments, reproduced in appendix I, DOD concurred with the 

findings of the report and stated that the review provided a critical 

examination of DOD’s contracting initiatives supporting the ADDP, TDP, 

and TRDP. DOD also provided a technical comment, which was 

incorporated. 

We are sending copies of this report to appropriate congressional 

committees, the Secretary of Defense, the Assistant Secretary of Defense 

(Health Affairs), and other interested parties. The report also will be 

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

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

me at (202) 512-7114 or dsouzav@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 major contributions to 

this report are listed in appendix II.

Vijay A. D’Souza

Acting Director, Health Care

Agency Comments
Appendix I: Comments from the Department of 

Defense

Page 18 GAO-14-497 TRICARE Dental Services Contracts

Appendix I: Comments from the Department 

of Defense
Appendix II: GAO Contact and Staff 

Acknowledgments

Page 19 GAO-14-497 TRICARE Dental Services Contracts

Vijay A. D’Souza, (202) 512-7114 or dsouzav@gao.gov

In addition to the contact named above, key contributors to this report 

were Kristi Peterson, Assistant Director; Kristen Joan Anderson; 

Jacquelyn Hamilton; Jennel Lockley; and Drew Long.

Appendix II: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(291148)
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