VA awards $170M+ for IT infrastructure support to Oracle Health, raising questions on competition and value

Contract Overview

Contract Amount: $170,259,387 ($170.3M)

Contractor: Oracle Health Government Services, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2020-08-27

End Date: 2026-07-28

Contract Duration: 2,161 days

Daily Burn Rate: $78.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: VISN 10 DEPLOYMENT ACTIVITIES FOR THE FOLLOWING SITES AND ASSOCIATED FACILITIES: CHALMERS P. WYLIE VETERAN OUTPATIENT CLINIC, CHILLICOTHE VAMC, DAYTON VAMC AND CINCINNATI VAMC, WHICH INCLUDES THE CINCINNATI-FORT THOMAS NURSING HOME AND DOMICILIARY.

Place of Performance

Location: KANSAS CITY, WYANDOTTE County, KANSAS, 66111

State: Kansas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $170.3 million to ORACLE HEALTH GOVERNMENT SERVICES, INC. for work described as: VISN 10 DEPLOYMENT ACTIVITIES FOR THE FOLLOWING SITES AND ASSOCIATED FACILITIES: CHALMERS P. WYLIE VETERAN OUTPATIENT CLINIC, CHILLICOTHE VAMC, DAYTON VAMC AND CINCINNATI VAMC, WHICH INCLUDES THE CINCINNATI-FORT THOMAS NURSING HOME AND DOMICILIARY. Key points: 1. Contract awarded on a sole-source basis, limiting potential cost savings from competitive bidding. 2. Significant duration of the contract (over 5 years) suggests a long-term need for these services. 3. The contract's value places it among larger IT service awards within the federal government. 4. Focus on critical VA facilities indicates a high-stakes operational requirement. 5. Lack of competition may lead to higher prices than if multiple vendors were involved. 6. Performance period extends well into the future, requiring ongoing monitoring of service delivery.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if Oracle Health Government Services, Inc. provided the most cost-effective solution. The price of over $170 million for IT infrastructure deployment and support across multiple VA facilities over more than five years warrants scrutiny. Comparisons to similar large-scale IT infrastructure projects within the federal government, especially those that were competitively procured, would be necessary to assess if this represents fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source procurement method, meaning only one vendor, Oracle Health Government Services, Inc., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified under specific circumstances (e.g., urgency, unique capabilities), they inherently limit price discovery and may not result in the best value for the government compared to a fully competed contract.

Taxpayer Impact: Taxpayers may be paying a premium for these IT services due to the absence of competition. Without the pressure of competing bids, the awarded price might be higher than what could have been achieved through an open market solicitation.

Public Impact

Veterans receiving care at Chalmers P. Wylie Veteran Outpatient Clinic, Chillicothe VAMC, Dayton VAMC, and Cincinnati VAMC (including the Cincinnati-Fort Thomas Nursing Home and Domiciliary) will benefit from improved IT infrastructure. Enhanced IT systems are crucial for the efficient operation of these healthcare facilities, supporting patient care, administrative functions, and data management. The geographic impact is concentrated within the regions served by these specific VA medical centers. The contract supports IT professionals and potentially other roles involved in the deployment and maintenance of these systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential savings.
Long contract duration (over 5 years) increases exposure to potential cost overruns or performance issues.
Lack of transparency in the sole-source justification process.
Potential for vendor lock-in given the scale and duration of the IT infrastructure support.

Positive Signals

Award to a known entity (Oracle Health) may ensure continuity of service.
Focus on critical VA facilities suggests a high priority for ensuring operational stability.
Firm Fixed Price contract type can provide cost certainty if scope is well-defined.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on computer systems design and related services. The federal IT services market is substantial, with agencies consistently investing in modernizing infrastructure, cybersecurity, and digital services. This award to Oracle Health Government Services, Inc. for deployment activities at key VA facilities aligns with the government's ongoing efforts to upgrade its technological capabilities. Comparable spending benchmarks would typically involve analyzing other large-scale IT infrastructure projects awarded by agencies like the VA or DoD, considering factors like scope, duration, and service type.

Small Business Impact

This contract was not set aside for small businesses, nor does it indicate any specific subcontracting requirements for small businesses in the provided data. The award to a large entity like Oracle Health Government Services, Inc. suggests that the primary focus was on the prime contractor's capabilities. This could mean limited direct opportunities for small businesses to participate in this specific contract, although they might be involved indirectly through Oracle's broader supply chain or other contracts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' contracting and program management offices. As a sole-source award, the justification and approval process would have been subject to specific federal procurement regulations and potentially internal VA review boards. Transparency regarding the specific justification for the sole-source award and ongoing performance monitoring reports would be key indicators of effective oversight. The Inspector General's office within the VA would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

VA IT Modernization Initiatives
Federal Health IT Services
Large-Scale IT Infrastructure Deployment
Oracle Health Government Services Contracts
Sole-Source IT Procurements

Risk Flags

Sole-source award raises concerns about fair pricing and competition.
Long contract duration increases risk exposure.
Lack of publicly available justification for sole-source procurement.
Potential for vendor lock-in with critical IT infrastructure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $170.3 million to ORACLE HEALTH GOVERNMENT SERVICES, INC.. VISN 10 DEPLOYMENT ACTIVITIES FOR THE FOLLOWING SITES AND ASSOCIATED FACILITIES: CHALMERS P. WYLIE VETERAN OUTPATIENT CLINIC, CHILLICOTHE VAMC, DAYTON VAMC AND CINCINNATI VAMC, WHICH INCLUDES THE CINCINNATI-FORT THOMAS NURSING HOME AND DOMICILIARY.

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 $170.3 million.

What is the period of performance?

Start: 2020-08-27. End: 2026-07-28.

What specific justification was provided for awarding this contract on a sole-source basis instead of through full and open competition?

The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. Federal Acquisition Regulation (FAR) Part 6 outlines the policies for contracting without full and open competition. Justifications typically include reasons such as only one responsible source being available, or the need for a unique capability or standardization. For this specific contract, the VA would have had to document why competition was not feasible or advantageous. Common justifications for sole-source IT contracts include proprietary technology, urgent needs where only one vendor can respond quickly, or follow-on work to an existing system where only the original vendor possesses the necessary knowledge and integration expertise. Without access to the official Justification for Other Than Full and Open Competition (JOFOC) document, the precise rationale remains unconfirmed, but it would need to meet strict regulatory criteria.

How does the per-unit cost or pricing structure of this contract compare to similar IT infrastructure deployment projects within the federal government?

Direct comparison of per-unit costs is difficult without detailed breakdowns of services and deliverables within the contract. However, the total award of over $170 million for a period of approximately five years (August 2020 to July 2026) suggests a significant investment. To benchmark value, one would need to compare this contract against other large-scale IT infrastructure projects, particularly those that were competitively procured. Factors such as the scope of services (e.g., hardware, software, installation, integration, ongoing support), the number of facilities supported, and the complexity of the existing infrastructure would need to be considered. Given this was a sole-source award, there is an inherent risk that the pricing may not be as competitive as it could have been under a multi-bid scenario. A detailed cost-volume-profit analysis or review of the contractor's proposed pricing against independent government cost estimates would be necessary for a thorough value assessment.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract, and how is performance being monitored?

The provided data does not specify the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. However, for a contract of this magnitude and importance, focused on IT infrastructure deployment and support for critical VA facilities, robust KPIs and SLAs are expected. These would typically cover aspects such as system uptime, response times for technical support, successful deployment timelines, data security compliance, and user satisfaction. Performance monitoring would likely involve regular reporting from Oracle Health Government Services, Inc., site visits, user feedback mechanisms, and potentially independent government quality assurance personnel. The Department of Veterans Affairs' contracting officer and contract specialists would be responsible for overseeing adherence to the contract terms and ensuring that the delivered services meet the required standards.

What is Oracle Health Government Services, Inc.'s track record with the Department of Veterans Affairs and other federal agencies, particularly on similar IT infrastructure projects?

Oracle Health Government Services, Inc. (and its predecessors/related entities) has a significant history of providing IT solutions and services to the federal government, including the Department of Veterans Affairs. Oracle's broader portfolio includes electronic health records (EHR), cloud services, database management, and various IT infrastructure components. Their involvement with the VA, particularly concerning health IT systems, is substantial. Past performance evaluations, contract histories, and any reported issues or successes on previous VA contracts would be critical in assessing their capability and reliability for this specific deployment activities contract. A review of contract databases and performance assessment reports (e.g., Contractor Performance Assessment Reporting System - CPARS) would provide insights into their track record.

What is the historical spending pattern for IT infrastructure support at these specific VA facilities (Chalmers P. Wylie, Chillicothe, Dayton, Cincinnati VAMC), and how does this $170M+ award compare?

The provided data focuses on a single contract award valued at over $170 million with a duration of approximately 2161 days (around 5.9 years). To understand historical spending patterns, one would need to examine previous contracts awarded to support IT infrastructure at these specific VA facilities. This would involve searching federal procurement databases (like FPDS or SAM.gov) for contracts related to Chalmers P. Wylie VOPC, Chillicothe VAMC, Dayton VAMC, and Cincinnati VAMC, filtering for IT services, infrastructure, and relevant North American Industry Classification System (NAICS) codes (like 541512). Analyzing the total spending on similar services over preceding years would reveal trends, identify previous vendors, and provide a baseline against which this current $170M+ award can be assessed for scale and potential increases or decreases in investment.

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: $170,259,387

Exercised Options: $170,259,387

Current Obligation: $170,259,387

Subaward Activity

Number of Subawards: 26

Total Subaward Amount: $10,693,817

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