TriWest Protests $20B Military Contract Awarded to UHG

TriWest-which originally won the health care contract but recently lost it to UnitedHealth Group after the government reopened the bidding process-is protesting the government's decision.

Roughly a week after UnitedHealth Group was awarded a $20.5 billion contract to provide health care services for members of the military, Phoenix-based TriWest Healthcare Alliance Corporation said Monday that it will formally protest the decision.

TriWest's appeal marks the latest step in an ongoing fight over the contract, under which health care services will be provided for active duty and retired military service members and their families in 21 western states, including Minnesota. The contract takes effect in April 2013 and involves 2.9 million members of military families.

After Tricare Management Activity-the military's health care program-originally awarded the contract to TriWest in 2009, Minnetonka-based UnitedHealth formally protested the decision. Tricare in April 2011 agreed to reopen the bidding process, and UnitedHealth announced last week that it was awarded the contract.

The overall contract is valued at $20.5 billion, but that figure accounts for the military's expenditures on health care services. UnitedHealth said it expects to receive about $1.4 billion for its administrative services over the course of five years under the terms of the contract.

TriWest said Monday that it has held the contract for 16 years, while UnitedHealth doesn't have experience providing military health care. The company claims that its bid was “significantly lower” than UnitedHealth's, and it will “cost the government and taxpayers hundreds of millions of dollars simply to change contractors.”

TriWest spokesman Scott Celley told Twin Cities Business that TriWest, which employs 1,700, was founded for the purpose of servicing the contract at stake, describing it as the “dominant factor of our business.”

When asked what will happen to the company's employees in the event that UnitedHealth retains the contract, Celley said “we're a long way from there,” and he believes “there's considerable reason to think this is going to take a different turn.”

UnitedHealth spokesman Matt Stearns, meanwhile, told Twin Cities Business on Tuesday that it is “disappointing” that TriWest is making “ungrounded public assertions” about UnitedHealth in its protest of the contract.

Assuming that UnitedHealth retains the contract, the company plans to “actively recruit high-quality workers” with experience in TriCare,” Stearns said.

UnitedHealth Group is Minnesota's largest public company based on its revenue, which totaled $101.9 billion in 2011.