TRICARE West Region Contract Awarded to TriWest for $5.6 Billion Over 3 Years

Contract Overview

Contract Amount: $5,591,409,552 ($5.6B)

Contractor: Triwest Healthcare Alliance Corp

Awarding Agency: Department of Defense

Start Date: 2024-01-01

End Date: 2026-12-31

Contract Duration: 1,095 days

Daily Burn Rate: $5.1M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Healthcare

Official Description: TRICARE MANAGED CARE SUPPORT SERVICES CONTRACT, 5TH GENERATION WEST REGION

Place of Performance

Location: PHOENIX, MARICOPA County, ARIZONA, 85053

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $5.59 billion to TRIWEST HEALTHCARE ALLIANCE CORP for work described as: TRICARE MANAGED CARE SUPPORT SERVICES CONTRACT, 5TH GENERATION WEST REGION Key points: 1. Significant contract value highlights the scale of TRICARE operations. 2. Competition method is 'Full and Open', suggesting a robust bidding process. 3. Risk is moderate due to the complexity of managed care support services. 4. Sector is Defense Healthcare, a critical area for military personnel and families.

Value Assessment

Rating: good

The contract type is Cost Plus Award Fee, which incentivizes performance but requires careful oversight to manage costs effectively. Benchmarking against similar large-scale healthcare support contracts is essential to ensure fair pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, indicating multiple bidders likely participated. This competitive process is expected to drive price discovery and ensure value for the government.

Taxpayer Impact: Taxpayer funds are being used for essential healthcare services for military members and their families, representing a significant but necessary investment.

Public Impact

Ensures healthcare access for over 2.5 million beneficiaries in the TRICARE West Region. Supports military readiness by maintaining the health and well-being of service members and their families. Impacts healthcare providers and facilities within the West Region network. Contributes to the stability and efficiency of the military health system.

Waste & Efficiency Indicators

Waste Risk Score: 75 / 10

Warning Flags

Potential for cost overruns with Cost Plus Award Fee structure.
Ensuring adequate network provider participation and patient access.
Managing contract performance and award fee determination effectively.

Positive Signals

Full and open competition promotes value.
Focus on managed care support services aims for efficiency.
Long-term contract provides stability for beneficiaries.

Sector Analysis

This contract falls within the Defense Healthcare sector, specifically managed care support services. Spending benchmarks for similar large-scale healthcare contracts are typically in the billions of dollars annually, reflecting the high cost of providing comprehensive medical services.

Small Business Impact

While the prime contractor is a large corporation, the contract may offer subcontracting opportunities for small businesses in areas such as IT support, administrative services, or specialized healthcare services within the West Region.

Oversight & Accountability

Oversight will be critical, particularly for the Cost Plus Award Fee structure, to ensure performance targets are met and costs are controlled. The Defense Health Agency will be responsible for monitoring contractor performance and ensuring compliance.

Related Government Programs

Direct Health and Medical Insurance Carriers
Department of Defense Contracting
Defense Health Agency Programs

Risk Flags

Potential for cost creep in Cost Plus Award Fee contracts.
Complexity of managing a large healthcare network.
Ensuring beneficiary access to timely and quality care.
Dependence on a single prime contractor for regional support.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $5.59 billion to TRIWEST HEALTHCARE ALLIANCE CORP. TRICARE MANAGED CARE SUPPORT SERVICES CONTRACT, 5TH GENERATION WEST REGION

Who is the contractor on this award?

The obligated recipient is TRIWEST HEALTHCARE ALLIANCE CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Health Agency).

What is the total obligated amount?

The obligated amount is $5.59 billion.

What is the period of performance?

Start: 2024-01-01. End: 2026-12-31.

How does the awarded amount compare to previous TRICARE West Region contracts, adjusted for inflation and scope changes?

A detailed comparison would require historical data on prior contracts, including their total value, duration, and specific services rendered. Adjusting for inflation and accounting for any changes in scope, beneficiary population, or healthcare service requirements is crucial for a meaningful assessment. Without this historical context, it's difficult to definitively state if the $5.6 billion award represents an increase or decrease in value relative to past agreements.

What are the key performance indicators (KPIs) used to determine the award fee, and how are they measured?

The KPIs for this Cost Plus Award Fee contract likely focus on critical aspects of managed care support, such as beneficiary access to care, network adequacy, quality of care metrics, patient satisfaction scores, and administrative efficiency. The Defense Health Agency would establish specific, measurable, achievable, relevant, and time-bound (SMART) goals for each KPI. Performance against these metrics would be regularly assessed to determine the contractor's eligibility for award fees.

What mechanisms are in place to ensure the long-term sustainability and cost-effectiveness of the healthcare services provided under this contract?

Mechanisms for sustainability and cost-effectiveness include the competitive bidding process, the Cost Plus Award Fee structure incentivizing performance, and ongoing oversight by the Defense Health Agency. The contract likely includes provisions for regular performance reviews, potential contract modifications to adapt to changing healthcare landscapes, and utilization management strategies to control costs while maintaining quality of care for beneficiaries.

Industry Classification

NAICS: Finance and Insurance › Insurance Carriers › Direct Health and Medical Insurance Carriers

Product/Service Code: MEDICAL SERVICES › GENERAL HEALTH CARE SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HT940220R0005

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 15810 N 28TH AVE, PHOENIX, AZ, 85053

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $65,200,227,941

Exercised Options: $13,634,269,877

Current Obligation: $5,591,409,552

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline