UPDATE 1-Aetna's multibillion-dollar contract in jeopardy

NEW YORK, Nov 4 (Reuters) - Aetna Inc's multibillion-dollar Department of Defense contract was in doubt on Wednesday after the U.S. Government Accounting Office upheld a protest from a rival health insurer. Health Net Inc filed the protest a week after Aetna won the DOD contract on July 13. By sustaining the protest, the GAO is suggesting that it has some merit. The DOD awarded Aetna the $2.8 billion managed care contract to provide services for the northern region of the department's TRICARE program, replacing Health Net. The contract included five one-year options for a total potential value of $16.7 billion. TRICARE administers the health care plan for 9.4 million members of the military, retirees and their families worldwide. Contractors provide health, medical and administrative support services. An Aetna spokesman said his company could generate gross revenue of about $1.1 billion over the five-year agreement. Based on procurement protocol, the DOD will review the recommendations issued by the GAO, the investigative arm of Congress, and determine how to proceed with the contract. "We will continue to cooperate with the Department of Defense as it considers the GAO's recommendations," Susan Peters, president of Aetna Government Health Plans, said in a statement. Health Net, in a filing with the U.S. Securities and Exchange Commission said it expects the GAO to release additional information regarding its decision including the remedy it recommended to the DoD. Neither Health Net nor Aetna could determine what impact the review would have on the contract's award, both companies said. (Reporting by Bill Berkrot, editing by Leslie Gevirtz) Keywords: AETNA/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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