VA awards $168M Oracle Health contract for computer systems design, with a 442-day duration

Contract Overview

Contract Amount: $168,010,808 ($168.0M)

Contractor: Oracle Health Government Services, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2025-01-22

End Date: 2026-04-09

Contract Duration: 442 days

Daily Burn Rate: $380.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: FORMALLY RECOGNIZE THE CONTRACTORS CORPORATE NAME CHANGE FROM CERNER GOVERNMENT SERVICES INC. TO ORACLE HEALTH GOVERNMENT SERVICES, INC. IAW FAR SUBPART 42.12.

Place of Performance

Location: KANSAS CITY, WYANDOTTE County, KANSAS, 66111

State: Kansas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $168.0 million to ORACLE HEALTH GOVERNMENT SERVICES, INC. for work described as: FORMALLY RECOGNIZE THE CONTRACTORS CORPORATE NAME CHANGE FROM CERNER GOVERNMENT SERVICES INC. TO ORACLE HEALTH GOVERNMENT SERVICES, INC. IAW FAR SUBPART 42.12. Key points: 1. Contract value of $168 million for computer systems design services. 2. Contract awarded to Oracle Health Government Services, Inc. 3. Duration of 442 days, ending April 9, 2026. 4. Contract type is Firm Fixed Price. 5. This contract was not competed. 6. The contract is a Delivery Order. 7. The contract is not a small business set-aside.

Value Assessment

Rating: fair

The contract value of $168 million for computer systems design services over approximately 1.5 years appears to be within a reasonable range for large-scale government IT projects. However, without specific details on the scope of services, deliverables, and performance metrics, a precise value-for-money assessment is challenging. Benchmarking against similar contracts for complex system design and integration would be necessary for a more definitive evaluation. The lack of competition also limits the ability to assess if the pricing reflects optimal market rates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. The absence of competition means that the Department of Veterans Affairs did not solicit offers from a range of potential providers, potentially limiting price discovery and innovation. The rationale for a sole-source award would need to be justified based on specific circumstances, such as unique capabilities or urgent needs.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. It also reduces transparency in the procurement process.

Public Impact

The Department of Veterans Affairs is the primary beneficiary, receiving computer systems design services. The contract supports the ongoing operations and potential modernization of VA's IT infrastructure. The contract is being performed in Kansas (ST: KS, SN: KANSAS). The contract is expected to impact the workforce involved in computer systems design and implementation within the awarded contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and limited vendor options for future needs.
Sole-source awards can reduce transparency and accountability in the procurement process.
The specific scope of 'Computer Systems Design Services' is broad and requires further definition to fully assess performance risks.

Positive Signals

The contract is awarded to a recognized entity, Oracle Health Government Services, Inc., suggesting established capabilities.
The contract has a defined period of performance, providing a clear timeline for service delivery.
The contract is a Firm Fixed Price type, which can offer cost certainty for the government.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical component of the broader Information Technology (IT) industry. This sector involves designing, developing, and implementing IT solutions for organizations. The market for these services is substantial, driven by the continuous need for technological upgrades, cybersecurity enhancements, and digital transformation across all sectors, including government. Comparable spending benchmarks would typically involve analyzing other large-scale IT system design and integration contracts awarded by federal agencies to understand typical pricing structures and contract values.

Small Business Impact

This contract was not a small business set-aside, and there is no indication of subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in this specific contract are likely limited. The absence of set-aside provisions or explicit subcontracting goals may not directly benefit the small business ecosystem for this particular award, though the prime contractor may engage small businesses in other capacities.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of Veterans Affairs contracting officers and program managers. Accountability measures are typically embedded within the contract's terms and conditions, including performance standards and payment schedules. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Veterans Affairs IT Modernization Programs
Federal Civilian IT Services Contracts
Health IT Systems Development
Computer Systems Design Services

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $168.0 million to ORACLE HEALTH GOVERNMENT SERVICES, INC.. FORMALLY RECOGNIZE THE CONTRACTORS CORPORATE NAME CHANGE FROM CERNER GOVERNMENT SERVICES INC. TO ORACLE HEALTH GOVERNMENT SERVICES, INC. IAW FAR SUBPART 42.12.

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 $168.0 million.

What is the period of performance?

Start: 2025-01-22. End: 2026-04-09.

What is the specific scope of work for these computer systems design services?

The provided data indicates the contract is for 'Computer Systems Design Services' (NAICS 541512) awarded to Oracle Health Government Services, Inc. However, the specific scope of work is not detailed. Typically, such services can encompass a wide range of activities including requirements analysis, system architecture design, software development, integration, testing, and implementation support. For a comprehensive understanding, one would need to review the contract's Statement of Work (SOW) or Performance Work Statement (PWS). This would clarify the exact systems being designed, the technologies involved, and the expected outcomes, which are crucial for assessing value and performance.

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

The data explicitly states the contract was 'NOT COMPETED,' signifying a sole-source award. Federal procurement regulations (like FAR Part 6) allow for sole-source procurements under specific circumstances, such as when only one responsible source can provide the required supplies or services, or in cases of urgent and compelling need. Without further documentation from the agency (e.g., a Justification for Other Than Full and Open Competition - JOFOC), the precise reason for this sole-source award remains unknown. This lack of competition limits price discovery and potentially increases costs for taxpayers compared to a fully competed contract.

How does the $168 million contract value compare to similar IT services contracts awarded by the VA or other agencies?

The $168 million contract value for computer systems design services over a period of approximately 1.5 years (ending April 2026) is substantial. To benchmark this value, one would need to compare it against similar large-scale IT system design and integration contracts awarded by the Department of Veterans Affairs or other federal agencies. Factors such as the complexity of the systems, the level of customization required, the specific technologies employed, and the duration of the contract are critical for a meaningful comparison. Given the sole-source nature, it's difficult to ascertain if this represents optimal market pricing without competitive bids.

What are the potential risks associated with a sole-source contract of this magnitude?

Sole-source contracts, especially those of significant value like $168 million, carry inherent risks. A primary risk is the potential for inflated pricing due to the absence of competitive pressure, which can lead to reduced value for taxpayer money. Another risk is vendor lock-in, where the government becomes heavily reliant on a single provider, potentially limiting flexibility and future options. Furthermore, without competition, there may be less incentive for the contractor to innovate or provide exceptional service. Oversight and robust performance management become even more critical to mitigate these risks.

What is Oracle Health Government Services, Inc.'s track record with the Department of Veterans Affairs?

Oracle Health Government Services, Inc. (formerly Cerner Government Services Inc.) has a significant history of working with the Department of Veterans Affairs, particularly concerning the VA's electronic health record (EHR) system. This contract, a delivery order under an existing arrangement or a new sole-source award, continues that relationship. Their track record involves large-scale IT implementations and support within the VA, which has faced both successes and challenges. Understanding their past performance, including project delivery timelines, budget adherence, and system performance, is crucial for assessing the risk and potential success of this current contract.

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: $206,861,301

Exercised Options: $168,010,808

Current Obligation: $168,010,808

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