Pentagon's $20 billion healthcare contract upheld

By Elise Viebeck - 07/03/12 11:40 AM ET

Federal officials are upholding a major military healthcare award to UnitedHealth Group in spite of complaints from a previous contractor.

Starting in 2013, UnitedHealth will manage healthcare in 21 states for active-duty military, retirees and families. The award is worth $20.5 billion.

UnitedHealth replaced TriWest Healthcare Alliance Corp., which was denied on all counts after disputing the Pentagon's choice with the Government Accountability Office.

The company, based in Phoenix, assisted with military healthcare for 16 years. It has said it might not survive losing the Pentagon's business, according to reports.

Experts said they expect the dispute to continue.

"There’s an awful lot at stake for TriWest, so they may want to go down fighting and they may win," Sheryl Skolnick, an analyst with CRT Capital Group, told Bloomberg.

"Until the last possible avenue of protest is exhausted, I have a feeling this contract won’t be finally awarded.”

Tri-West recently retained a D.C. lobbying firm — Denny Miller Associates — according to public records.

—This post was updated at 5:31 p.m.