VA awards $156M to Oracle Health for EHRM software development to tailor capabilities to VA-specific needs

Contract Overview

Contract Amount: $155,882,857 ($155.9M)

Contractor: Oracle Health Government Services, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2020-09-01

End Date: 2027-03-12

Contract Duration: 2,383 days

Daily Burn Rate: $65.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: TO 34 - EHRM SOFTWARE DEVELOPMENT. THE CONTRACTOR SHALL PROVIDE SOFTWARE DEVELOPMENT TO ADDRESS REQUIREMENTS IN FUNCTIONAL AREAS SUCH AS CLINICAL, DENTAL AND REVENUE CYCLE TO MATCH EHRM CAPABILITIES TO VA-SPECIFIC REQUIREMENTS.

Place of Performance

Location: KANSAS CITY, WYANDOTTE County, KANSAS, 66111

State: Kansas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $155.9 million to ORACLE HEALTH GOVERNMENT SERVICES, INC. for work described as: TO 34 - EHRM SOFTWARE DEVELOPMENT. THE CONTRACTOR SHALL PROVIDE SOFTWARE DEVELOPMENT TO ADDRESS REQUIREMENTS IN FUNCTIONAL AREAS SUCH AS CLINICAL, DENTAL AND REVENUE CYCLE TO MATCH EHRM CAPABILITIES TO VA-SPECIFIC REQUIREMENTS. Key points: 1. Contract focuses on adapting existing Electronic Health Record Management (EHRM) capabilities to unique VA requirements. 2. Significant investment in software development suggests a long-term commitment to enhancing the EHRM system. 3. Sole-source award raises questions about potential cost efficiencies and market competition. 4. The duration of the contract (over 6 years) indicates a substantial and ongoing need for these services. 5. Performance is tied to the successful integration and customization of clinical, dental, and revenue cycle functions.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specific focus on tailoring existing software. Without competitive bids, it's difficult to assess if the $156 million represents a fair market price for the described software development services. The contract's value is intrinsically linked to the success of the broader EHRM program, making a direct value-for-money assessment at this stage complex. Future performance and cost overruns will be key indicators of its overall value.

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 it's deemed not to be in the government's best interest to compete. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may not benefit from the cost savings that can arise from a competitive bidding process. The absence of multiple offers means the VA did not leverage market forces to secure the most advantageous pricing.

Public Impact

Veterans will benefit from potentially improved and tailored EHRM functionalities across clinical, dental, and revenue cycle management. The contract supports the ongoing development and enhancement of a critical healthcare IT system for the VA. Geographic impact is nationwide, as the EHRM system serves all VA facilities. Workforce implications include the need for specialized software developers and potentially IT support staff within Oracle Health.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits transparency and potential for cost savings through competition.
High contract value over an extended period presents significant financial commitment and risk.
Dependence on a single vendor for critical EHRM software development could lead to vendor lock-in.
Success is heavily reliant on the contractor's ability to effectively integrate and customize complex software.

Positive Signals

Addresses specific VA requirements, aiming for a more tailored and effective EHRM system.
Contract duration suggests a stable, long-term partnership to ensure system evolution.
Focus on software development indicates a proactive approach to system improvement and modernization.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical component of the broader IT services market. The VA's investment in EHRM software development is part of a larger trend among government agencies and large healthcare providers to modernize and integrate their health information systems. The market for healthcare IT, particularly EHR solutions, is substantial, with significant ongoing spending on development, customization, and maintenance to meet evolving regulatory and user needs.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there explicit information regarding subcontracting opportunities for small businesses. The award to a large prime contractor like Oracle Health may limit direct opportunities for small businesses in the primary development work. However, the scale of such a project could indirectly create opportunities for small businesses in supporting roles or through the prime contractor's subcontracting plan, if one exists.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of Veterans Affairs contracting officers and program managers. The contract's performance will be monitored against defined milestones and deliverables. Transparency is facilitated through contract award databases, but the sole-source nature limits public insight into the negotiation process. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

VA Electronic Health Record Modernization (EHRM) Program
Department of Defense (DoD) MHS Genesis EHR System
Healthcare IT Services
Custom Software Development Contracts
Large-Scale IT System Modernization

Risk Flags

Sole-source award
High contract value
Long contract duration
Dependence on incumbent technology
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $155.9 million to ORACLE HEALTH GOVERNMENT SERVICES, INC.. TO 34 - EHRM SOFTWARE DEVELOPMENT. THE CONTRACTOR SHALL PROVIDE SOFTWARE DEVELOPMENT TO ADDRESS REQUIREMENTS IN FUNCTIONAL AREAS SUCH AS CLINICAL, DENTAL AND REVENUE CYCLE TO MATCH EHRM CAPABILITIES TO VA-SPECIFIC REQUIREMENTS.

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 $155.9 million.

What is the period of performance?

Start: 2020-09-01. End: 2027-03-12.

What is the track record of Oracle Health Government Services, Inc. in delivering large-scale EHRM software development projects for federal agencies?

Oracle Health Government Services, Inc. (formerly Cerner Government Services) has a significant track record, notably as the incumbent contractor for the Department of Defense's MHS Genesis electronic health record system, which shares similarities with the VA's EHRM program. This experience provides them with deep insights into the complexities of federal healthcare IT implementations. However, the MHS Genesis program has faced its own set of challenges, including cost overruns and user adoption issues, which may inform potential risks and performance expectations for this VA contract. Their ability to successfully tailor software to specific agency needs, as required here, will be a key performance indicator.

How does the $156 million contract value compare to similar EHRM software development efforts in the federal government?

Direct comparisons are difficult due to the unique nature of tailoring existing systems versus developing entirely new ones, and the sole-source award for this specific contract. However, the overall EHRM modernization efforts by both the VA and DoD represent multi-billion dollar, decade-long initiatives. The $156 million for software development over approximately six years suggests a substantial investment focused on customization and enhancement rather than the full system deployment cost. For context, the broader MHS Genesis program has seen costs projected well into the tens of billions over its lifecycle. This specific award appears to be a significant, but focused, component of the VA's larger EHRM strategy.

What are the primary risks associated with a sole-source award for critical EHRM software development?

The primary risks associated with a sole-source award for critical EHRM software development include a lack of competitive pressure, which can lead to inflated pricing and reduced incentive for innovation or efficiency. There's also the risk of vendor lock-in, where the government becomes heavily reliant on a single provider, making future transitions or renegotiations more difficult and potentially costly. Furthermore, without the vetting process of a competitive bid, there's an increased risk that the chosen vendor may not be the most capable or cost-effective solution available, or that unforeseen technical challenges could arise without alternative options readily accessible.

How will the success of this contract contribute to the overall effectiveness of the VA's EHRM program?

The success of this contract is crucial for the overall effectiveness of the VA's EHRM program because it directly addresses the need to adapt the core software to the VA's unique operational requirements. By providing tailored software development for clinical, dental, and revenue cycle functions, the contractor aims to ensure that the EHRM system seamlessly integrates with and supports the specific workflows and needs of VA healthcare providers and administrators. Effective customization can lead to improved user adoption, enhanced data accuracy, streamlined administrative processes, and ultimately, better patient care. Conversely, failures in this development phase could result in a system that is cumbersome, inefficient, or fails to meet the critical needs of the VA.

What are the historical spending patterns for EHRM software development and related services within the VA?

The VA has historically allocated significant funding towards its health IT infrastructure, including its EHR systems. Prior to the current EHRM initiative, the VA managed its own legacy systems, involving substantial spending on maintenance, upgrades, and integration. The current EHRM program represents a major strategic shift and a significant increase in dedicated spending for a unified, modern system. While specific historical figures for 'EHRM software development' as a distinct category are difficult to isolate from broader IT modernization budgets, the overall investment in EHR modernization across federal agencies, including the VA and DoD, has been in the billions of dollars over the past decade, reflecting the complexity and criticality of these systems.

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: $165,258,794

Exercised Options: $155,882,857

Current Obligation: $155,882,857

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $17,509,998

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