Under TRICARE, DOD provides health care to its eligible beneficiaries through military-operated hospitals and clinics worldwide and supplements this care with civilian providers. Conclusions

As of June 30, 2000, the number of change orders issued had almost tripled, while the number of unsettled change orders had more than doubled since our last report. Although we recommended in that report that DOD devote high-level attention to managing improvements to the change order process, this was not consistently done. As a result, until recently, none of TMA’s numerous initiatives effected much improvement to the process or reduced the backlog. The current small backlog is the result of a recent concerted effort, not better management over time. TMA’s new Change Management Process appears to address many of TMA’s problems with change orders by controlling the volume of issuance, using a more collaborative negotiation process, and settling costs before implementation. However, past initiatives that appeared promising ultimately delivered little in terms of preventing or reducing the backlog. The high volume of change orders soon to enter the new Change Management Process makes it imperative that TMA management closely monitor the process to prevent future backlogs. Appendix I: Scope and Methodology

Our objectives were to update the 1997 report and provide information on (1) the status of the change order backlog and whether DOD reduced it, (2) factors that contributed to the growth of the backlog, and (3) DOD’s new change order process. To provide information on factors that contributed to the previous growth of the backlog, we used the January 8, 2001, COTS database to calculate the   average amount of time needed to finalize all change orders settled by June 30, 2000;   average age of unsettled change orders as of June 30, 2000;   number of change orders issued each month between May 1, 1997, and June 30, 2000;   number of proposals that had been submitted as of June 30, 2000;   average amount of time from change order issuance to proposal submission;   average number of days between proposal submission and change order settlement as of June 30, 2000; and   number of change orders issued since May 1997 that had an IGCE.
Why GAO Did This Study

Under TRICARE, the Department of Defense's (DOD) managed care program, military-operated hospitals and clinics are supplemented by contracted civilian services. Since the inception of TRICARE, DOD has made many changes to these contracts via contract change orders. Since July 1997, when GAO reported that DOD was trying to improve its change order process, the backlog of change orders has continued to grow. This report evaluates (1) the status of the change order backlog and how DOD addressed it, (2) factors that contributed to the growth of the backlog, and (3) DOD's new initiative to improve the change order process.

What GAO Found

GAO found that as of June, 2000, the number of change orders issued had almost tripled, while the number of unsettled change orders had more than doubled since July 1997. Despite recommendations to devote high-level attention to managing improvements to the change order process, this was not done. Until recently, none of TRICARE Management Activity's (TMA) many initiatives significantly improved the process or reduced the backlog. The current small backlog is the result of recent concerted effort, not better management over time. TMA's new Change Management Process (CMP) appears to address many of TMA's problems with change orders. However, past initiatives have made similar promises and delivered little when they were abandoned or eclipsed by higher priorities. The high volume of change orders now or soon to enter the new CMP makes it imperative that TMA management closely monitor the process to prevent future backlogs.