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

* DoD to review GAO recommendations

* Contract had potential value of $16.7 bln

* Could generate $1.1 bln gross rev over 5 yrs

NEW YORK, Nov 4 (Reuters) - Aetna Inc's (AET.N) 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 (HNT.N) 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.