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July 19--WPS Health Insurance has received a major government contract renewal valued at $484 million over six years that will help preserve several hundred jobs, the Monona company announced Friday.
WPS was awarded the contract to continue to administer TRICARE for Life, a Medicare supplement program that serves about 2 million military retirees over the age of 65.
The program accounts for about 11 percent of WPS' overall revenue, according to a company official.
"This is a major success story for WPS," said Brian Brugger, executive vice president of the WPS TRICARE Division. "TRICARE is an important part of our business at WPS, and we worked very hard to retain this contract. It's a significant contract for WPS to be able to retain."
WPS originally was awarded the TRICARE contract in 2004 and had it renewed once before. The new contract will go into effect in June 2015 and run for six years.
WPS has about 3,300 employees, including close to 2,300 at its Monona headquarters. Two years ago, WPS lost a contract for the Western Region of TRICARE, which resulted in the loss of about 500 jobs, including 250 locally.
"Because we were re-awarded this contract, we'll be able to maintain many of the jobs we have in place today," Brugger said. "We went through a similar contract process where we lost the West Region contract and had to lay off all the employees. It would've been fairly similar to what happened. It's a very large contract for us, and we wouldn't have been able to absorb all the employees if we were not awarded this contract."
WPS President and CEO Mike Hamerlik said the contract will help secure the future of WPS.
"At WPS, we have been making significant investments in new technology and processes to meet the needs of our customers, including the federal government," Hamerlik said. "We have visionary plans to move forward as a company and winning this contract proves we're on the right track."
The company will continue to seek new government contracts when there's a good match with its capabilities, Hamerlik added.
WPS still has one more potential obstacle. The two other companies that bid for the contract will have an opportunity to meet with the Department of Defense and the Defense Health Agency to learn why they didn't receive the contract and could file a protest. Brugger said he is confident that the award to WPS will be affirmed.
"This is a performance-based contract and a competitive bid contract," he said. "So you have to go in there with a very competitive price, but you also have to show that our performance has been outstanding. The government recognized that through this particular procurement process."
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