DoD's $2.9B TRICARE contract to Health Net, Inc. for healthcare services awarded in 1999

Contract Overview

Contract Amount: $2,895,440,017 ($2.9B)

Contractor: Health NET, Inc.

Awarding Agency: Department of Defense

Start Date: 1999-10-01

End Date: 2008-12-31

Contract Duration: 3,379 days

Daily Burn Rate: $856.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: 200008!9700!001043!ZD06 !TRICARE SUPPORT OFFICE !MDA90695C0007 !A!*!001700171F !19991001!19991030!848003661!798330908!798330908!N!0RMH6!FOUNDATION HEALTH FEDERAL SERV!2025 AEROJET RD !RANCHO CORDOVA !CA!95742!64000!067!06!SACRAMENTO !SACRAMENTO !CALIFORNIA!0001!+000000042108!N!N!000000000000!Q201!GENERAL HEALTH CARE SERVICES !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !8099!3!B!S!C!B!A!*!A !N!J!2!004!B!* !C!N!Z!* !* !N!C!*!A!A!A!A!A!A!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: RANCHO CORDOVA, SACRAMENTO County, CALIFORNIA, 95741, UNITED STATES OF AMERICA

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $2.90 billion to HEALTH NET, INC. for work described as: 200008!9700!001043!ZD06 !TRICARE SUPPORT OFFICE !MDA90695C0007 !A!*!001700171F !19991001!19991030!848003661!798330908!798330908!N!0RMH6!FOUNDATION HEALTH FEDERAL SERV!2025 AEROJET RD !RANCHO CORDOVA !CA!95742!64000!067!06!SACRAMENTO !SACRAMENTO !CALIFORNIA!0001!+000000042108!N!N!… Key points: 1. Contract awarded via full and open competition, suggesting a robust market. 2. Long contract duration of nearly 10 years may indicate stable performance requirements. 3. Significant contract value suggests a critical role in military healthcare delivery. 4. Awarded to a single prime contractor, raising questions about potential single points of failure. 5. Geographic focus on California for the contractor's address. 6. Firm Fixed Price contract type aims to control costs for the government.

Value Assessment

Rating: fair

The total value of $2.9 billion over nearly 10 years averages to approximately $290 million annually. Benchmarking this against similar large-scale healthcare contracts for military populations is difficult without more specific service details. However, the firm fixed-price structure suggests an attempt to lock in costs. The sheer scale of the contract implies significant resource allocation, but without detailed performance metrics or comparisons to other TRICARE support contracts, a definitive value-for-money assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit bids. The data does not specify the number of bidders, which is crucial for understanding the intensity of the competition. A high number of bidders typically leads to better price discovery and potentially lower costs for the government. The absence of this detail limits a full assessment of how effectively competition drove value.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages a wider range of offers, potentially leading to more competitive pricing and innovative solutions.

Public Impact

Beneficiaries include military personnel, retirees, and their families covered under the TRICARE program. Services delivered encompass general healthcare services, crucial for maintaining the health and readiness of the armed forces. Geographic impact is nationwide for TRICARE beneficiaries, though the contractor's primary address is in California. Workforce implications include potential employment opportunities for healthcare professionals and administrative staff within Health Net, Inc. and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to complacency or reduced agility in adapting to changing healthcare needs.
Reliance on a single prime contractor for such a large program presents a risk if performance falters.
Lack of specific performance metrics in the provided data makes it hard to gauge effectiveness.
Potential for cost overruns if the fixed-price contract did not adequately account for all eventualities.

Positive Signals

Awarded through full and open competition, suggesting a competitive bidding process.
Firm Fixed Price contract type provides cost certainty for the government.
Long-term contract indicates a stable relationship and potentially satisfactory performance over time.
Large contract value suggests the contractor is capable of handling significant healthcare service delivery.

Sector Analysis

This contract falls within the Healthcare sector, specifically focusing on managed care and support services for a large government program. The market for military healthcare services is substantial, with significant government spending aimed at ensuring the well-being of service members and their families. Comparable spending benchmarks would involve analyzing other large TRICARE contracts or similar managed care contracts for large populations, which often run into billions of dollars over their lifecycles.

Small Business Impact

The provided data indicates that small business participation (sb) was 'false' for this contract. This suggests that small businesses were likely not a primary focus for set-asides or direct subcontracting opportunities under this specific award. Further investigation would be needed to determine if any subcontracting plans were mandated or if small businesses participated indirectly through larger teaming arrangements.

Oversight & Accountability

Oversight for TRICARE contracts typically falls under the purview of the TRICARE Management Activity (TMA), now part of the Defense Health Agency (DHA). Inspector General (IG) investigations are a standard accountability measure for large DoD contracts. Transparency is often managed through contract award databases and reporting requirements, though detailed performance data may be less publicly accessible. The long duration suggests ongoing oversight was likely in place.

Related Government Programs

TRICARE Prime
TRICARE Standard
TRICARE For Life
DoD Healthcare Services
Managed Care Support Contracts

Risk Flags

Potential for single-source dependency due to single prime contractor.
Lack of detailed performance data makes value assessment difficult.
Long contract duration may reduce flexibility.
Unclear if small business subcontracting goals were met.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.90 billion to HEALTH NET, INC.. 200008!9700!001043!ZD06 !TRICARE SUPPORT OFFICE !MDA90695C0007 !A!*!001700171F !19991001!19991030!848003661!798330908!798330908!N!0RMH6!FOUNDATION HEALTH FEDERAL SERV!2025 AEROJET RD !RANCHO CORDOVA !CA!95742!64000!067!06!SACRAMENTO !SACRAMENTO !CALIFORNIA!0001!+000000042108!N!N!000000000000!Q201!GENERAL HEALTH CARE SERVICES !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !8099!3!B!S!C!B!A!*!A !N!J!2!004!B!* !C!N!Z!* !* !N!C!*!A!A!A!A!A!A!* !*!N!A!C!N!*!*!*!*!*!

Who is the contractor on this award?

The obligated recipient is HEALTH NET, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Tricare Management Activity).

What is the total obligated amount?

The obligated amount is $2.90 billion.

What is the period of performance?

Start: 1999-10-01. End: 2008-12-31.

What was the specific scope of 'General Health Care Services' provided under this contract?

The provided data categorizes the service under 'GENERAL HEALTH CARE SERVICES' (PSC code Q201). This broad category typically encompasses a wide range of medical services, including physician services, hospital care, diagnostic testing, preventive care, and potentially specialized medical treatments. For a contract of this magnitude awarded to Health Net Federal Services, it likely involved managing a network of civilian healthcare providers to deliver care to TRICARE beneficiaries in a specific region or for specific populations. The exact breakdown of services would be detailed in the contract's Statement of Work (SOW), which is not included in the provided data snippet.

How did Health Net, Inc.'s performance compare to other contractors during the contract period?

The provided data does not include performance metrics or ratings for Health Net, Inc. on this specific contract (MDA90695C0007). To assess performance comparison, one would need access to contract performance reports, CPARS (Contractor Performance Assessment Reporting System) data, or any award-fee determinations made during the contract's lifecycle. Without this information, it's impossible to definitively compare Health Net's performance against expectations or against potential competitors during the 1999-2008 period.

What was the total number of bids received for this 'full and open competition' contract?

The provided data indicates the contract was awarded under 'FULL AND OPEN COMPETITION' (CT = 'FULL AND OPEN COMPETITION') and lists the number of offers received as '4' (NO = 4). While this confirms that multiple bids were submitted, the specific number (4) provides a baseline for competition. A higher number of bidders generally suggests more robust competition, which can lead to better pricing and value for the government. However, the quality and competitiveness of those four bids would determine the ultimate impact on price discovery and cost savings.

Were there any significant contract modifications or change orders issued during its nearly 10-year duration?

The provided data snippet does not contain information about contract modifications, amendments, or change orders. Large, long-duration contracts like this often undergo modifications to adjust scope, pricing, or timelines based on evolving requirements or unforeseen circumstances. To determine if significant modifications occurred, one would need to consult the contract's official file, including any supplemental agreements or modification records maintained by the contracting agency (Department of Defense / Tricare Management Activity).

What was the annual spending trend for this contract over its lifespan?

The total contract value is listed as $2,895,440,017.46 (a) and the duration is 3379 days (dur), spanning from October 1, 1999, to December 31, 2008. This equates to approximately 9.25 years. Dividing the total value by the number of years gives an average annual spending of roughly $313 million. However, the spending was likely not uniform year-over-year. Firm Fixed Price contracts can sometimes front-load spending or have uneven payment schedules based on milestones or service delivery. Without detailed annual financial data, the precise spending trend cannot be determined from this summary.

What is the significance of the 'PSC' code being blank?

The 'PSC' field (Product or Service Code) is listed as blank in the provided data. PSC codes are standardized government-wide codes used to classify the goods and services procured by federal agencies. A blank PSC code is unusual for a contract of this size and nature. Typically, 'GENERAL HEALTH CARE SERVICES' would correspond to a specific PSC code, such as Q201. The absence of a PSC code might indicate a data entry error, a legacy system issue, or a specific classification nuance not captured in this summary. It hinders precise categorization and comparison with other contracts using standard PSCs.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 21281 BURBANK BLVD FL 4, WOODLAND HILLS, CA, 91367

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

Contract Characteristics

Cost or Pricing Data: NO

Timeline