VA awards $519M EHRM Operations contract to Oracle Health, a sole-source delivery order

Contract Overview

Contract Amount: $518,959,506 ($519.0M)

Contractor: Oracle Health Government Services, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2022-05-01

End Date: 2027-04-10

Contract Duration: 1,805 days

Daily Burn Rate: $287.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: EHRM OPERATIONS

Place of Performance

Location: KANSAS CITY, WYANDOTTE County, KANSAS, 66111

State: Kansas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $519.0 million to ORACLE HEALTH GOVERNMENT SERVICES, INC. for work described as: EHRM OPERATIONS Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. The contract duration of 1805 days (approx. 5 years) suggests a long-term operational need. 3. Fixed-price contract type aims to control costs, but sole-source nature may negate savings. 4. The award is a delivery order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract, though details are not provided. 5. Focus on EHRM operations indicates critical IT infrastructure supporting veteran healthcare. 6. The significant dollar value warrants close scrutiny of performance and value for money.

Value Assessment

Rating: questionable

Benchmarking the value of this $519 million contract is challenging without knowing the specific services included and the underlying IDIQ contract details. However, awarding a contract of this magnitude on a sole-source basis raises concerns about whether the VA secured the best possible price. Typically, competitive bidding drives down costs and encourages innovation. The fixed-price nature offers some cost control, but the lack of competition means there's less market pressure to ensure optimal pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Oracle Health Government Services, Inc., was solicited. This approach bypasses the standard competitive procurement process. While sole-source awards can be justified under specific circumstances (e.g., urgency, unique capabilities), they inherently limit price discovery and reduce the potential for obtaining the most advantageous pricing for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions typically achieved through a competitive bidding process, potentially leading to higher overall expenditures for the government.

Public Impact

Veterans will benefit from the continued operation and support of the Electronic Health Record Management (EHRM) system. Ensures the delivery of critical IT services necessary for managing patient health information. The contract's impact is national, supporting healthcare delivery across VA facilities. Requires a workforce skilled in IT operations, system maintenance, and potentially EHRM-specific expertise.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the justification for a sole-source award.
Potential for vendor lock-in due to the scale and criticality of the EHRM system.
Performance risks associated with a single vendor managing such a vital system.

Positive Signals

Fixed-price contract type provides some cost certainty.
Award to an established vendor with presumed experience in EHRM operations.
Long-term contract duration suggests a commitment to stable system support.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical component of the broader IT services market. The EHRM Operations contract is vital for the Department of Veterans Affairs' digital transformation and healthcare delivery. The market for large-scale health IT systems and their ongoing operations is dominated by a few major players, often leading to significant contract values. Comparable spending benchmarks would typically involve other large federal health IT system operations and maintenance contracts.

Small Business Impact

This contract does not appear to have a small business set-aside (ss=false, sb=false). As a sole-source award to a large prime contractor, there are no direct subcontracting implications for small businesses mandated by this specific award. However, the prime contractor may choose to subcontract portions of the work to small businesses, but this is not a requirement of the contract itself.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' contracting and program management offices. Given the critical nature of EHRM, there are likely internal performance monitoring mechanisms. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected. Transparency is limited by the sole-source nature and the lack of publicly available details on the justification for this award.

Related Government Programs

Veterans Health Administration (VHA) IT Services
Federal Health IT Modernization Programs
Electronic Health Record Systems
Department of Veterans Affairs IT Operations

Risk Flags

Sole-source award raises concerns about competition and potential overpricing.
Lack of detailed service scope in provided data hinders comprehensive value assessment.
Potential for vendor lock-in with a critical, long-term IT system.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $519.0 million to ORACLE HEALTH GOVERNMENT SERVICES, INC.. EHRM OPERATIONS

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 $519.0 million.

What is the period of performance?

Start: 2022-05-01. End: 2027-04-10.

What specific services are included under 'EHRM Operations' for this $519 million contract?

The provided data indicates the contract is for 'EHRM Operations' and falls under NAICS code 541512 (Computer Systems Design Services). While specific service details are not in the abbreviated data, 'EHRM Operations' typically encompasses a wide range of activities essential for the functioning of an Electronic Health Record Management system. This can include system maintenance, software updates and patching, user support and help desk services, data management and integrity, system security monitoring and incident response, performance tuning, disaster recovery planning and execution, and potentially integration with other healthcare IT systems. The significant value suggests comprehensive, long-term operational support rather than a discrete project.

What is the justification for awarding this significant contract on a sole-source basis?

The provided data explicitly states the contract type as 'NOT COMPETED', which typically signifies a sole-source award. Federal procurement regulations allow for sole-source awards under specific circumstances, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. For a large IT operations contract like EHRM, justifications might include the need for continuity of services from the incumbent provider due to complex integration, specialized knowledge, or the high cost and risk associated with transitioning to a new vendor. However, without the specific justification document (e.g., a Justification and Approval - J&A), it's impossible to confirm the exact rationale. The lack of competition is a key concern regarding value for money.

How does the $519 million award compare to historical spending on EHRM operations by the VA?

The provided data only includes details for this specific award. To compare historical spending, one would need to analyze the VA's budget and contract databases for previous years related to EHRM operations. This $519 million represents the total value over the contract's duration (estimated 5 years). Annual spending would be approximately $100-115 million per year. Understanding if this represents an increase, decrease, or stable level of spending compared to prior periods requires access to historical contract data and budget allocations for the VA's EHRM program. Such analysis is crucial for identifying trends and assessing the long-term financial commitment.

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

Sole-source awards for critical IT infrastructure like EHRM present several risks. Firstly, the lack of competition can lead to inflated prices, as the vendor faces less pressure to offer competitive rates. Secondly, it can stifle innovation, as there's no incentive for alternative vendors to develop competing solutions or for the incumbent to significantly improve services beyond contractual requirements. Thirdly, it creates a high degree of vendor dependency ('vendor lock-in'), making it difficult and costly to switch providers in the future, even if performance issues arise. Finally, without competitive benchmarking, it's harder to objectively assess whether the services provided represent good value for taxpayer money.

What is Oracle Health Government Services, Inc.'s track record with the VA, particularly regarding EHRM?

Oracle Health Government Services, Inc. (formerly Cerner Government Services) is a major player in the federal health IT space and has been involved with the VA's EHRM modernization efforts. The VA's decision to award this significant operations contract to them suggests a continued reliance on their capabilities, likely stemming from their role in the initial implementation or previous operational support phases. A thorough assessment would require reviewing past performance evaluations, any documented issues or successes related to their work with the VA's EHRM system, and their overall history in managing large-scale federal IT contracts. Their established presence implies familiarity but also raises questions about the potential benefits missed by not exploring other vendors.

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 › IT AND TELECOM - APLLICATIONS

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: $632,834,476

Exercised Options: $518,959,506

Current Obligation: $518,959,506

Subaward Activity

Number of Subawards: 34

Total Subaward Amount: $12,462,763

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