Government contract may bring 800 jobs to PGBA [Florence Morning News, S.C.]

April 08--FLORENCE, S.C. -- Executives at Florence-based PGBA found out last month that they were part of a winning contract bid for a juicy piece of Pentagon business.

UnitedHealth Group's subsidiary United Military and Veterans Services (UMVS) won the $20.5 billion bid to to provide health insurance to active military personnel, veterans and their dependents in the 21-state western region known as TRICARE West. Florence'sPGBA, LLC, a subsidiary of Blue Cross Blue Shield of South Carolina, fits into the picture as a subsidiary of the partner of a subsidary of the other partner. It will be handling the millions of medical claims and customer service solutions -- something the 30-year-old company is already doing in the TRICARE north and south regions -- if the contract comes through.

Although the bid has been awarded, that is still a big if. The company that lost the bid is challenging the result. PGBA won't know the outcome until July, and because it has been on the other end of a challenge -- another PGBA partner won a bid challenge several years ago -- PGBA President and Chief Operating Officer Michael Skarupa says that nothing is certain until the last government contractor signs.

"The government evaluates these bids, these extremely complex and extremely large bids on the bidders' past performance, technical solution and price," Skarupa said. "If someone loses, they are challenging the evaluation of those factors."

Skarupa said that securing the third and final TRICARE national contract shows that primary contract providers, as well as the government, believe in PGBA's ability to accurately provide support to the system of 8.8 million military beneficiaries in the United States.

"One of the key things that they evaluate when they're evaluating these bids is past performance," Skarupa said. "PGBA, for example, scored the highest you could score by the government in these bids on our past performance scores. Low risk, high confidence is what they call it."

Skarupa says the high ratings are a result of years of experience the company has working with the medical industry and government. And it's not just talk. Skarupa and his company have consistent numbers to back it up.

In 2011 the company processed 40 million claims with an accuracy of 99.8 percent and a mean cycle time of paying claims in five days. Claims come to the company electronically when an active military personnel, veteran or their dependents seek medical care off a military base.

"Our No. 1 asset is the employees that work here," Skarupa said. "Longevity in our workforce is about 15 years and that's unheard in our business. People come here, they like it. It's not just a job, it's a career. And that's one of the reasons one of these prime contractors come to us, is for the stable workforce, a trained workforce and good performance."

If the TRICARE West contract moves forward, there could be even more loyal PGBA employees in Florence, or in some of the company's other offices. The new contract will require some 800 additional jobs. Skarupa said it's too early to see where those jobs will be. PGBA's main office is in Florence, but it also has offices in Columbia, Camden and Surfside Beach. And some of the work could wind up elsewhere.

"We'll look at BlueCross and PGBA and at that time make the right decision on what makes the most sense on where to put people," Skarupa said. "Today I can't be crystal clear on x jobs in x locations. Check with me in July and at that time we'll re-evaluate how the protests came out."

The United States is divided into three TRICARE regions: north, south and west. In the north, PGBA has been a subcontractor with Health Net Federal Services for 18 years and in the south with Humana Military Healthcare Services for 16 years. PGBA provides services such as system platforms to privde claims processing systems, enrollment systems, customer service calls centers and fiscal services.

Despite working with multiple companies, much of what PGBA does stays the same.

"They have some of their own unique, managed care strategies and stuff like that but the core claims system, core claims processing, customer service is about the same," Skarupa said.

The previous primary contractor for the TRICARE West contract was TriWest Healthcare, a for-profit company that built its business around the contract that it held for 16 years. After originally winning the TRICARE West bid again in July 2009, UMVS launched a lengthy protest that forced TRICARE Management Activity to cancel the bid and rebid in August 2011 -- which resulted in it being awarded to UMVS.

"As taxpayers, we welcome competition and believe that the government should purchase goods and services using a fair and lawful process," TriWest President David J. McIntyre Jr., said in an April 5 statement. "However, based on the debriefing, we believe that the government's decision in awarding the TRICARE West region contract is the result of a flawed and unfair process."

The GAO will issue a ruling July 5.

PGBA is no stranger to this process and losing the bid on appeal is an eventuality that Skarupa must make plans to accept..

"Ultimately if the business was lost, we would look around at BlueCross government programs to see if we were successful somewhere else and try and cover the jobs that way," Skarupa said.

The good news for PGBA is that it won't be losing jobs if the contract letting is reversed.

PGBA's current business is secure. PGBA's primary contractor for the north region, Humana Military, secured its contract on an appeal after losing the initial bid, saving 950 PGBA jobs. Humana now has five one-year options exercisable by the Department of Defense contract.

That contract restarted Apri 1 and the south contract started up again April 1, 2011.

"It's difficult but I'll tell ya, one of the things we're most proud of is that during that time of uncertainty in the south and, that was most of the jobs here in Florence, our performance didn't slip once. Turnover didn't accelerate," Skarupa said.

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