VA awards $1.28B for EHRM operational management, including hosting, to Oracle Health

Contract Overview

Contract Amount: $1,276,290,795 ($1.3B)

Contractor: Oracle Health Government Services, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2018-05-17

End Date: 2026-05-16

Contract Duration: 2,921 days

Daily Burn Rate: $436.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: IGF::OT::IGF TASK ORDER 36C10B18N0003 UNDER IDIQ CONTRACT 36C10B18D5000 FOR OPERATIONAL MANAGEMENT SERVICES, TO INCLUDE HOSTING, FOR THE EHRM APPLICATIONS, APPLICATION SERVICES, AND ALL SUPPORTING EHRM DATA.

Place of Performance

Location: KANSAS CITY, WYANDOTTE County, KANSAS, 66111

State: Kansas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $1.28 billion to ORACLE HEALTH GOVERNMENT SERVICES, INC. for work described as: IGF::OT::IGF TASK ORDER 36C10B18N0003 UNDER IDIQ CONTRACT 36C10B18D5000 FOR OPERATIONAL MANAGEMENT SERVICES, TO INCLUDE HOSTING, FOR THE EHRM APPLICATIONS, APPLICATION SERVICES, AND ALL SUPPORTING EHRM DATA. Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition. 2. Long-term contract duration (8 years) suggests a significant, ongoing need for these services. 3. Focus on EHRM applications and data highlights the critical nature of health IT infrastructure. 4. Operational management and hosting are essential for maintaining the functionality and security of veteran health records. 5. The contract's value indicates a substantial investment in modernizing the VA's health IT systems. 6. Fixed-price contract type aims to control costs, but sole-source nature limits negotiation leverage.

Value Assessment

Rating: questionable

The contract value of $1.28 billion over approximately 8 years represents a significant investment in IT operational management. Without competitive bidding, it is difficult to benchmark the value for money. However, the scale of the award suggests a critical need for these services within the VA's Electronic Health Record Modernization (EHRM) program. The fixed-price nature of the contract provides some cost certainty, but the lack of competition means the government may not have secured the lowest possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities or when urgency dictates a rapid award. The lack of competition limits the government's ability to solicit and compare offers, potentially leading to higher prices than if the contract had been competed.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure to drive down costs. The government's negotiating position is weakened without alternative sources.

Public Impact

Veterans will benefit from the continued operational stability and support of the EHRM system, ensuring access to their health records. The contract delivers essential IT services, including hosting and application management, for a critical government healthcare system. The primary geographic impact is national, supporting the VA's nationwide healthcare network. This contract supports a significant IT workforce, likely involving specialized roles in system administration, cybersecurity, and application development.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Long-term nature of the contract could lead to vendor lock-in and reduced flexibility.
Dependence on a single vendor for critical EHRM infrastructure poses a risk if performance issues arise.

Positive Signals

Awarding to Oracle Health, a known entity in health IT, suggests a focus on continuity and established expertise.
Fixed-price contract type provides cost predictability for the duration of the contract.
The significant investment signals a commitment to modernizing and maintaining the VA's health IT infrastructure.

Sector Analysis

The healthcare IT sector is characterized by complex systems, stringent regulatory requirements (like HIPAA), and a high demand for specialized services. This contract falls within the IT services sub-sector, specifically focusing on the operational management and hosting of a large-scale Electronic Health Record system. The market for EHR systems and their supporting infrastructure is substantial, with major players like Oracle Health, Cerner (now part of Oracle), and Epic Systems dominating. The VA's EHRM initiative is one of the largest government IT modernization efforts, making this contract a significant component within the broader federal health IT landscape.

Small Business Impact

This contract was not set aside for small businesses and was awarded sole-source to Oracle Health Government Services, Inc. There is no indication of subcontracting requirements for small businesses within the provided data. This means that the direct economic benefit to the small business ecosystem from this specific award is likely minimal, as the prime contract is with a large, established corporation.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' contracting and program management offices. Given the critical nature of the EHRM system, there is likely robust internal oversight. The VA Office of Inspector General (OIG) would also have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract. Transparency is generally maintained through contract databases like FPDS, though detailed performance metrics may not always be publicly disclosed.

Related Government Programs

VA Electronic Health Record (EHR) Modernization Program
Federal Health IT Services
Cloud Computing Services for Government
IT Infrastructure Management Contracts
Department of Veterans Affairs IT Spending

Risk Flags

Sole-source award
High contract value
Critical infrastructure dependency
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $1.28 billion to ORACLE HEALTH GOVERNMENT SERVICES, INC.. IGF::OT::IGF TASK ORDER 36C10B18N0003 UNDER IDIQ CONTRACT 36C10B18D5000 FOR OPERATIONAL MANAGEMENT SERVICES, TO INCLUDE HOSTING, FOR THE EHRM APPLICATIONS, APPLICATION SERVICES, AND ALL SUPPORTING EHRM DATA.

Who is the contractor on this award?

The obligated recipient is ORACLE HEALTH GOVERNMENT SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $1.28 billion.

What is the period of performance?

Start: 2018-05-17. End: 2026-05-16.

What is the historical spending by the VA on EHRM operational management and hosting services?

The provided data represents a single, large award for operational management and hosting services for the EHRM applications. Historical spending data for this specific task order under the IDIQ contract is not detailed here. However, the VA's overall EHRM initiative has been a multi-billion dollar program involving significant investments in software, hardware, implementation, and ongoing support. To understand historical spending patterns, one would need to examine previous task orders under the parent IDIQ contract (36C10B18D5000) and potentially other related contracts for EHRM components and services awarded over the past several years. The scale of this $1.28 billion award suggests a substantial and sustained commitment to maintaining and operating the EHRM system.

How does the per-unit cost of Oracle Health's services compare to industry benchmarks for similar EHR hosting and management?

Benchmarking the per-unit cost for this contract is challenging due to its sole-source nature and the comprehensive scope of services, which includes hosting, application management, and support for EHRM. Without competitive bids, there is no direct market comparison for this specific package of services. Industry benchmarks for cloud hosting and IT managed services vary widely based on service level agreements, security requirements, and infrastructure complexity. Given the specialized nature of EHR systems and the critical infrastructure involved, costs are likely to be higher than standard IT services. A detailed analysis would require breaking down the contract into specific service components and comparing those to market rates for comparable government or commercial contracts, which is not feasible with the data provided.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?

The provided data does not specify the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. However, for a critical system like the VA's Electronic Health Record Modernization (EHRM) applications, one would expect robust SLAs related to system uptime, response times for support, data availability, security incident response, and disaster recovery. KPIs would likely focus on the contractor's performance against these SLAs, such as achieving a certain percentage of system availability (e.g., 99.9%), meeting defined response times for critical issues, and maintaining compliance with security protocols. These metrics are crucial for ensuring the reliability and effectiveness of the EHRM system for veteran care.

What is Oracle Health's track record with large-scale federal health IT implementations and operational support?

Oracle Health (formerly Cerner Government Services) has a significant track record with large-scale federal health IT implementations, most notably its role as a primary contractor for the Department of Defense's MHS GENESIS EHR system and its involvement in the VA's EHRM program. The company has extensive experience in developing, implementing, and supporting complex electronic health record systems for both military and civilian healthcare providers. Their experience includes managing large data repositories, ensuring interoperability, and providing ongoing operational support. However, both the DoD and VA EHRM programs have faced significant challenges, including cost overruns, schedule delays, and user dissatisfaction, which have been widely reported. This suggests that while Oracle Health possesses the technical capability, the execution and management of such massive undertakings present considerable complexities and risks.

What are the potential risks associated with a sole-source award for critical EHRM infrastructure?

The primary risk associated with a sole-source award for critical EHRM infrastructure is the lack of competitive pressure, which can lead to inflated prices and reduced incentives for the contractor to innovate or optimize performance beyond the minimum requirements. There's also a risk of vendor lock-in, making it difficult and costly to switch providers if performance issues arise or if better solutions become available. Furthermore, reliance on a single vendor for such a vital system increases vulnerability; any disruption in the vendor's operations, financial stability, or strategic direction could have severe consequences for the VA's ability to provide healthcare services. Ensuring robust contract oversight and performance management becomes paramount to mitigate these risks.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Oracle Health Government Services Inc.

Address: 10200 ABILITIES WAY, KANSAS CITY, KS, 66111

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $1,282,850,028

Exercised Options: $1,276,290,795

Current Obligation: $1,276,290,795

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $1,523,851

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10B18D5000

IDV Type: IDC

Timeline