DOD Releases Draft RFP for New $58 Billion Health Care Contracts

The Pentagon released a draft request for proposal (DRFP) for the next generation of its massive healthcare contracts on Aug 28. The two contracts are potentially valued at more than $58 billion.

The DRFP is for the fifth-generation of managed-care support contracts, known as T-5, for the military’s TRICARE health services program. T-5, will deliver health care services for the approximately 9 million military personnel, retirees and dependents enrolled in the military’s TRICARE health system in the United States. Healthcare for about half a million people overseas is provided through a separate contract.

The Government will conduct a full and open competition for up to two contract awards for services in TRICARE regions East and West. According to the notice, one contractor may not be awarded both contracts even if it can demonstrate best value for both regions. In the event this occurs, the government may select the contractor for a single region only and award the other regional contract to a different company. The upcoming contracts include a performance period for eight one-year options beginning in Jan. 2024 and running through Dec. of 2031.

The current TRICARE West contract is held by Health Net Federal Services LLC, a subsidiary of Centene Corp., and the TRICARE East contract is held by Humana Military Healthcare Services Inc., a subsidiary of Humana Inc. To date, Centene has earned $7.51 billion on TRICARE West, which ends in Dec. of 2023 and has a $17.5 billion total value. Humana has earned $15.9 billion of a total $39.9 billion value, and that contract ends in April of 2022. Since the two current contracts are for shorter periods than the proposed eight years for T-5, the potential value of T-5 could exceed the $58 billion combined total ceilings for the East and West contracts.

The government plans to host a virtual industry day on Sept. 14 and 15. Responses to the draft RFP are due by Sept. 18.

To contact the analyst on this story: Robert Levinson in Washington, D.C. at rlevinson@bgov.com