VA EHRM Program Management Services Contract Exceeds $252 Million, Awarded Sole-Source to Oracle Health

Contract Overview

Contract Amount: $252,662,240 ($252.7M)

Contractor: Oracle Health Government Services, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2020-09-17

End Date: 2027-02-16

Contract Duration: 2,343 days

Daily Burn Rate: $107.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: THIS TASK ORDER PROVIDES ENTERPRISE PROGRAM AND PROJECT MANAGEMENT SUPPORT SERVICES FOR THE VA EHRM SYSTEM. THESE SERVICES INCLUDE EHRM PROGRAM MANAGEMENT, EHRM ENTERPRISE MANAGEMENT, EHRM FUNCTIONAL MANAGEMENT, AND EHRM TECHNICAL MANAGEMENT.

Place of Performance

Location: KANSAS CITY, WYANDOTTE County, KANSAS, 66111

State: Kansas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $252.7 million to ORACLE HEALTH GOVERNMENT SERVICES, INC. for work described as: THIS TASK ORDER PROVIDES ENTERPRISE PROGRAM AND PROJECT MANAGEMENT SUPPORT SERVICES FOR THE VA EHRM SYSTEM. THESE SERVICES INCLUDE EHRM PROGRAM MANAGEMENT, EHRM ENTERPRISE MANAGEMENT, EHRM FUNCTIONAL MANAGEMENT, AND EHRM TECHNICAL MANAGEMENT. Key points: 1. Significant investment in enterprise program and project management for a critical healthcare system. 2. Sole-source award raises questions about competition and potential for cost efficiencies. 3. Long-term contract duration (nearly 7 years) suggests a strategic, ongoing need for these services. 4. Focus on EHRM program, enterprise, functional, and technical management indicates comprehensive support. 5. Contract value places it among substantial IT service procurements within the federal government. 6. Potential for vendor lock-in due to the sole-source nature and long-term commitment.

Value Assessment

Rating: questionable

The contract value of over $252 million for enterprise program and project management support for the VA EHRM system is substantial. Without comparable sole-source contracts for similar scope and duration, a direct value-for-money assessment is difficult. However, the absence of competition inherently limits the government's ability to benchmark pricing against market rates or other potential providers, raising concerns about whether the most cost-effective solution was secured. The fixed-price nature provides some cost certainty, but the lack of competitive pressure could lead to inflated costs over the contract's lifespan.

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 unique capabilities or proprietary technology required for the service, or in cases of urgent need. The lack of competition means that the government did not benefit from the price discovery and innovation that typically arises from a competitive bidding process. This can limit the government's leverage in negotiating favorable terms and pricing.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without multiple offers, there is less assurance that the price reflects the best value achievable in the market.

Public Impact

Veterans will benefit from improved management and oversight of the Electronic Health Record Modernization (EHRM) system, potentially leading to better healthcare delivery. The contract ensures continuity of essential program and project management services for a critical national healthcare IT initiative. The services delivered are foundational to the successful implementation and operation of the VA's EHRM system across its facilities. Workforce implications are likely concentrated within Oracle Health Government Services, Inc., with potential for specialized project management roles. Geographic impact is national, as the EHRM system serves veterans across all VA facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Long contract duration could lead to vendor lock-in and reduced flexibility.
Lack of transparency in the sole-source justification process.
Dependence on a single contractor for critical EHRM program management.
Potential for scope creep without robust competitive oversight.

Positive Signals

Ensures continuity of essential program management for a vital healthcare system.
Award to an established contractor with presumed experience in large-scale IT projects.
Firm Fixed Price contract provides cost certainty for the government.
Long-term commitment allows for strategic planning and deep integration of services.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a significant segment of the federal IT market. The federal government spends billions annually on IT services, with a substantial portion dedicated to system design, integration, and program management. This contract is a key component of the VA's broader EHRM initiative, which itself represents one of the largest and most complex IT modernization efforts in government. Comparable spending benchmarks for large-scale, sole-source IT program management contracts can be difficult to establish due to the unique nature of such awards.

Small Business Impact

This contract does not appear to include a small business set-aside. As a sole-source award to a large prime contractor, there is a potential for subcontracting opportunities for small businesses. However, the extent to which small businesses will be involved depends on the prime contractor's subcontracting plan and the specific needs of the program management services. Without explicit set-aside requirements, the direct impact on the small business ecosystem is limited to potential subcontracting roles.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Veterans Affairs contracting officers and program managers. Transparency is limited due to the sole-source nature of the award. Accountability measures would be defined within the contract's performance work statement and terms. Inspector General jurisdiction would apply to any investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

VA Electronic Health Record Modernization (EHRM)
Federal Health IT Services
IT Program Management Support
Large-Scale System Modernization Contracts
Sole-Source IT Procurements

Risk Flags

Sole-source award
High contract value
Long contract duration
Critical healthcare IT system
Past performance concerns on EHRM program

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $252.7 million to ORACLE HEALTH GOVERNMENT SERVICES, INC.. THIS TASK ORDER PROVIDES ENTERPRISE PROGRAM AND PROJECT MANAGEMENT SUPPORT SERVICES FOR THE VA EHRM SYSTEM. THESE SERVICES INCLUDE EHRM PROGRAM MANAGEMENT, EHRM ENTERPRISE MANAGEMENT, EHRM FUNCTIONAL MANAGEMENT, AND EHRM TECHNICAL MANAGEMENT.

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 $252.7 million.

What is the period of performance?

Start: 2020-09-17. End: 2027-02-16.

What is the track record of Oracle Health Government Services, Inc. in managing large-scale federal IT programs, particularly in the healthcare sector?

Oracle Health Government Services, Inc. (formerly Cerner Government Services) has a significant track record in the federal healthcare IT space, most notably as the incumbent contractor for the VA's EHRM system. Their experience includes managing the implementation and ongoing support of complex electronic health record systems for various government agencies. However, the EHRM program itself has faced considerable challenges and scrutiny regarding its cost, timeline, and effectiveness. While Oracle possesses the technical capability and has been deeply involved in the EHRM system, the program's history suggests that managing such large-scale federal IT initiatives, especially those involving significant change management and user adoption, presents inherent difficulties regardless of the contractor's experience.

How does the $252 million contract value compare to similar federal IT program management contracts, especially those awarded sole-source?

The $252 million contract value for nearly seven years of enterprise program and project management support is substantial, placing it among significant federal IT service procurements. However, direct comparisons are challenging due to the unique nature of sole-source awards and the specific scope of EHRM program management. Large-scale IT modernization programs often involve multi-year, multi-hundred-million-dollar contracts. Sole-source awards, by definition, lack a competitive benchmark, making it difficult to assess if this value is aligned with market rates. Generally, competitive procurements for similar services might yield lower prices due to vendor competition. The value here reflects the criticality and complexity of the EHRM system and the long-term commitment required.

What are the primary risks associated with this sole-source contract, and what mitigation strategies are in place?

The primary risks associated with this sole-source contract include potential cost overruns due to a lack of competitive pressure, vendor lock-in limiting future flexibility, and the risk that the contractor may not perform optimally without the impetus of competition. Mitigation strategies are typically embedded within the contract's performance work statement (PWS), including defined deliverables, performance metrics, and potential remedies for non-performance. The VA's contracting officers and program managers are responsible for active oversight, ensuring adherence to the PWS, and managing the relationship to mitigate risks. However, the inherent limitations of a sole-source award mean that proactive government management is crucial.

What is the expected impact of this contract on the effectiveness and efficiency of the VA's EHRM system?

This contract is intended to ensure the effective and efficient management of the VA's EHRM system by providing dedicated program and project management expertise. The services cover enterprise, functional, and technical management, aiming to streamline operations, facilitate upgrades, and ensure the system meets the needs of healthcare providers and ultimately, veterans. The success of the EHRM system is heavily reliant on robust program management to navigate its complexities, manage stakeholder expectations, and drive continuous improvement. The long-term nature of the contract suggests an expectation of sustained effectiveness and efficiency gains over its duration, assuming successful execution by the contractor and diligent oversight by the VA.

How has federal spending on IT program management services for large healthcare systems evolved, and where does this contract fit in?

Federal spending on IT program management services for large healthcare systems has steadily increased over the past decade, driven by the push for modernization, interoperability, and improved patient care through technology. Initiatives like the VA's EHRM modernization represent a significant portion of this spending. This contract, valued at over $252 million, fits within the upper echelon of such procurements, reflecting the scale and complexity of managing a nationwide electronic health record system. It underscores the government's reliance on specialized contractors to manage these critical, high-stakes IT projects, often involving substantial long-term investments and strategic partnerships.

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: $259,897,371

Exercised Options: $252,662,240

Current Obligation: $252,662,240

Subaward Activity

Number of Subawards: 39

Total Subaward Amount: $10,188,865

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