VA's $135.6M EHRM contract to Oracle Health faces scrutiny over sole-source award and long duration

Contract Overview

Contract Amount: $135,572,988 ($135.6M)

Contractor: Oracle Health Government Services, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2019-09-27

End Date: 2026-06-29

Contract Duration: 2,467 days

Daily Burn Rate: $55.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EHRM TO 21 WAVE 2 DEPLOYMENT

Place of Performance

Location: KANSAS CITY, WYANDOTTE County, KANSAS, 66111

State: Kansas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $135.6 million to ORACLE HEALTH GOVERNMENT SERVICES, INC. for work described as: EHRM TO 21 WAVE 2 DEPLOYMENT Key points: 1. The contract's sole-source nature raises questions about potential overpayment and lack of competitive pressure. 2. A 7-year performance period (2019-2026) suggests a long-term commitment with limited flexibility. 3. The fixed-price contract type shifts performance risk to the contractor, but oversight is crucial. 4. The absence of small business set-asides or subcontracting goals warrants further investigation. 5. This award represents a significant investment in a critical healthcare IT system for veterans. 6. The contract's value is substantial, requiring robust performance monitoring to ensure value for money.

Value Assessment

Rating: questionable

Benchmarking this contract's value is challenging due to its sole-source nature and specific scope. However, the significant duration and total value suggest a need for rigorous performance metrics and cost controls. Without competitive bids, it's difficult to ascertain if Oracle Health's pricing reflects market rates or if taxpayers are receiving optimal value. The VA must ensure that the services delivered align precisely with the contracted scope and that any cost overruns are thoroughly justified.

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 a specific vendor possesses unique capabilities or when there's a compelling justification for avoiding competition. The lack of competition here means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple bids had been solicited.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. The VA's justification for the sole-source award needs to be exceptionally strong to assure the public that this was the most cost-effective approach.

Public Impact

Veterans will benefit from the deployment and ongoing support of the Electronic Health Record Modernization (EHRM) system. The contract supports the delivery of critical IT services for managing patient health records. The primary geographic impact is within the Department of Veterans Affairs healthcare facilities nationwide. This contract likely involves a significant workforce of IT professionals and support staff within Oracle Health and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Long contract duration (7 years) may reduce flexibility and increase risk of technological obsolescence.
Lack of transparency in the sole-source justification could mask inefficiencies or poor value.
Absence of small business participation may limit opportunities for smaller innovative firms.

Positive Signals

Fixed-price contract shifts performance risk to the contractor, potentially protecting the government from cost overruns.
Focus on a critical system (EHRM) indicates a strategic investment in veteran healthcare infrastructure.
The award is to a known entity (Oracle Health), potentially leveraging existing expertise.

Sector Analysis

The healthcare IT sector is a rapidly growing and critical component of the federal government's infrastructure. This contract falls within the Computer Systems Design Services category, focusing on the implementation and support of a large-scale Electronic Health Record system. The market for EHR solutions is competitive, but specific government contracts, especially those for modernization or integration of existing systems, can sometimes lead to sole-source or limited competition awards due to unique requirements or vendor lock-in.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there explicit information regarding subcontracting goals for small businesses. The sole-source nature of the award further limits opportunities for small businesses to participate directly. This could mean a missed opportunity to leverage the innovation and agility of the small business sector in supporting this critical IT initiative.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Veterans Affairs contracting officers and program managers. Given the sole-source nature and significant value, robust oversight mechanisms, including regular performance reviews, audits, and adherence to contract milestones, are essential. Transparency regarding the justification for the sole-source award and ongoing performance reporting would enhance accountability.

Related Government Programs

Department of Veterans Affairs Electronic Health Record Modernization Program
Federal Health IT Spending
Large-Scale IT System Deployments
Sole-Source IT Contracts

Risk Flags

Sole-source award
Long contract duration
Lack of competition
Critical IT system dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $135.6 million to ORACLE HEALTH GOVERNMENT SERVICES, INC.. EHRM TO 21 WAVE 2 DEPLOYMENT

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 $135.6 million.

What is the period of performance?

Start: 2019-09-27. End: 2026-06-29.

What was the specific justification provided by the VA for awarding this EHRM contract to Oracle Health on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified under circumstances such as unique capabilities, urgent needs, or when only one responsible source can provide the required supplies or services. For a contract of this magnitude and duration, the VA would have had to demonstrate that competition was not feasible or would not be in the government's best interest. Further investigation into VA procurement records or public justifications would be necessary to ascertain the precise rationale.

How does the per-unit cost or total cost of this contract compare to similar EHR system deployments in other federal agencies or large healthcare organizations?

Direct comparison of per-unit costs is difficult without detailed breakdowns of services and user counts within this specific contract. Furthermore, the sole-source nature of this award prevents a direct market-based comparison. However, the total contract value of $135.6 million over approximately seven years for a nationwide EHRM deployment is substantial. Benchmarking would require access to detailed cost data from comparable sole-source or competitively awarded EHR implementations, considering factors like scope, complexity, and vendor pricing models. The VA's internal cost-benefit analyses and performance metrics would be key to assessing value.

What are the key performance indicators (KPIs) being used to measure the success of the EHRM TO 21 WAVE 2 DEPLOYMENT, and how has Oracle Health performed against them?

The provided data does not specify the key performance indicators (KPIs) for this contract. Successful EHRM deployments typically involve metrics related to system uptime, data accuracy, user adoption rates, reduction in medical errors, efficiency gains in clinical workflows, and patient satisfaction. The VA's contract management team would be responsible for defining and monitoring these KPIs. Regular performance reports and contract reviews would detail Oracle Health's adherence to these metrics. Without access to these reports, assessing contractor performance is not possible.

What is the historical spending pattern for EHRM systems within the Department of Veterans Affairs, and how does this contract fit into that trend?

The Department of Veterans Affairs has a long history of investing in its health IT infrastructure, including its Electronic Health Record systems. The EHRM program represents a significant modernization effort, aiming to replace legacy systems with a more integrated and capable platform. This $135.6 million contract is a substantial component of that modernization initiative. Historical spending would likely show a pattern of continuous investment in IT, with major programs like EHRM representing large, multi-year capital expenditures designed to improve care delivery and data management for veterans.

What are the potential risks associated with a sole-source award for a critical system like EHRM, and what mitigation strategies are in place?

The primary risks of a sole-source award for EHRM include potential overpricing due to lack of competition, reduced incentive for innovation from the contractor, and vendor lock-in. Mitigation strategies typically involve rigorous contract negotiation, establishing clear performance standards and penalties, conducting independent cost analyses, and maintaining strong government oversight. The VA would need to ensure that Oracle Health is held accountable for delivering high-quality services at a fair price, despite the absence of competitive pressure. Regular performance reviews and audits are crucial.

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: $135,572,988

Exercised Options: $135,572,988

Current Obligation: $135,572,988

Subaward Activity

Number of Subawards: 20

Total Subaward Amount: $7,905,702

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