DoD's $250M MHS Genesis deployment to 21 facilities, awarded to Leidos, faces scrutiny over value and competition
Contract Overview
Contract Amount: $25,020,962 ($25.0M)
Contractor: Leidos, Inc.
Awarding Agency: Department of Defense
Start Date: 2020-05-29
End Date: 2026-01-31
Contract Duration: 2,073 days
Daily Burn Rate: $12.1K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE INCENTIVE
Sector: IT
Official Description: DEPLOYMENT OF THE MHS GENESIS TO WAVE 21 MILITARY TREATMENT FACILITIES LOCATED PRIMARILY IN HAWAII.
Place of Performance
Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22209
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $25.0 million to LEIDOS, INC. for work described as: DEPLOYMENT OF THE MHS GENESIS TO WAVE 21 MILITARY TREATMENT FACILITIES LOCATED PRIMARILY IN HAWAII. Key points: 1. The contract's fixed-price incentive structure aims to control costs, but performance against benchmarks requires close monitoring. 2. Full and open competition was utilized, suggesting a potentially competitive pricing environment. 3. The long duration of the contract (2073 days) and phased deployment may introduce execution risks. 4. This contract supports a critical modernization effort within the Defense Health Agency, impacting military healthcare delivery. 5. The IT services sector sees significant investment, and this contract represents a substantial portion of spending in this niche. 6. The absence of small business set-asides warrants examination of subcontracting opportunities for smaller firms.
Value Assessment
Rating: fair
Benchmarking this contract's value is challenging without detailed cost breakdowns. The fixed-price incentive (FPI) contract type suggests an attempt to balance cost control with contractor performance incentives. However, the total value of $250.2 million over approximately six years for deploying a complex IT system across 21 facilities requires careful monitoring of cost overruns and performance metrics to ensure it represents good value for money. Comparisons to similar large-scale IT system deployments in the federal sector would be beneficial.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This approach is generally favorable for price discovery and ensuring the government receives competitive offers. The specific number of bidders and the evaluation criteria would provide further insight into the intensity of the competition and its impact on the final award price.
Taxpayer Impact: Full and open competition increases the likelihood of taxpayers receiving a fair price by fostering a competitive bidding environment, potentially driving down costs and improving service quality.
Public Impact
Military personnel and their families at 21 treatment facilities will benefit from modernized electronic health records. The deployment of MHS Genesis aims to improve healthcare coordination, patient safety, and operational efficiency for the Defense Health Agency. The geographic impact is concentrated in Hawaii, where the 21 military treatment facilities are located. This contract supports IT professionals and potentially other roles involved in system deployment, integration, and maintenance.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns given the complexity and duration of the deployment.
- Ensuring adequate contractor performance and adherence to deployment timelines across multiple sites.
- The long-term sustainment and maintenance costs post-deployment are not detailed here.
- Lack of explicit small business participation could limit broader economic impact.
Positive Signals
- Awarded under full and open competition, suggesting a competitive process.
- Fixed-price incentive contract type aims to align contractor incentives with government cost objectives.
- Supports a critical modernization initiative for military healthcare.
- Long-term contract provides stability for deployment and potential follow-on support.
Sector Analysis
This contract falls within the Information Technology (IT) services sector, specifically focusing on computer systems design and integration. The federal government is a major consumer of IT services, with significant spending allocated to modernizing legacy systems and deploying new technologies. The MHS Genesis program is a large-scale initiative within the healthcare IT sub-sector, aiming to create a unified electronic health record system across the Department of Defense. Comparable spending benchmarks would involve looking at other large federal IT system deployments, such as those in civilian agencies or other defense modernization programs.
Small Business Impact
The contract data indicates that small business participation was not a specific requirement or set-aside (ss: false, sb: false). This suggests that the primary focus was on securing the best overall offer through full and open competition, rather than prioritizing small business involvement. While this may lead to efficiencies for the prime contractor, it could limit subcontracting opportunities for small businesses in the IT services space. Further analysis would be needed to determine if Leidos has a history of subcontracting with small businesses on similar large-scale projects.
Oversight & Accountability
Oversight for this contract will likely be managed by the Defense Health Agency (DHA) program office, with potential involvement from the Department of Defense Inspector General (IG) for audits and investigations. The fixed-price incentive contract type necessitates close monitoring of performance metrics and cost expenditures to ensure the contractor is meeting milestones and staying within budget. Transparency will depend on the DHA's reporting practices regarding contract performance and any public disclosures related to the MHS Genesis deployment.
Related Government Programs
- MHS Genesis EHR Modernization
- Defense Health Agency IT Modernization
- Federal Electronic Health Record Systems
- Department of Defense IT Services Contracts
Risk Flags
- Potential for schedule delays
- Risk of cost overruns
- Integration complexity
- Workforce adoption challenges
- Cybersecurity vulnerabilities
Tags
it-services, defense, department-of-defense, defense-health-agency, computer-systems-design-services, full-and-open-competition, fixed-price-incentive, delivery-order, large-contract, healthcare-it, hawaii, modernization
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $25.0 million to LEIDOS, INC.. DEPLOYMENT OF THE MHS GENESIS TO WAVE 21 MILITARY TREATMENT FACILITIES LOCATED PRIMARILY IN HAWAII.
Who is the contractor on this award?
The obligated recipient is LEIDOS, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Health Agency).
What is the total obligated amount?
The obligated amount is $25.0 million.
What is the period of performance?
Start: 2020-05-29. End: 2026-01-31.
What is the track record of Leidos, Inc. in managing large-scale federal IT deployments, particularly in the healthcare sector?
Leidos, Inc. has a significant track record in managing large-scale federal IT contracts, including those within the healthcare domain. They have been involved in various aspects of IT modernization for government agencies, often handling complex system integrations and deployments. For instance, Leidos has held contracts related to health IT infrastructure, data analytics, and electronic health record (EHR) systems for other federal entities. Their experience with the MHS Genesis program itself, prior to this specific delivery order, would also be a key indicator. A review of past performance evaluations and any reported issues on similar projects would provide a clearer picture of their capabilities and potential risks associated with this contract.
How does the pricing structure of this fixed-price incentive (FPI) contract compare to other large federal IT system deployments?
The fixed-price incentive (FPI) contract type is designed to share cost savings or overruns between the government and the contractor, based on achieving target costs and performance objectives. This structure is common for complex projects where cost certainty is difficult to establish upfront but where incentives for cost control are desired. Compared to firm-fixed-price (FFP) contracts, FPI offers more flexibility but requires robust oversight to manage the incentive sharing. Compared to cost-plus contracts, FPI aims for greater cost discipline. Benchmarking requires analyzing the target cost, ceiling price, and share ratio against similar large-scale IT deployments, considering the specific risks and complexities involved in each.
What are the primary risks associated with deploying the MHS Genesis system across 21 facilities in Hawaii?
The primary risks associated with deploying MHS Genesis across 21 facilities in Hawaii include logistical challenges due to the geographic distribution and island location, potential for integration issues with existing local IT infrastructure, workforce training and adoption hurdles among healthcare providers, and the inherent complexity of a large-scale EHR system implementation. Schedule delays are a common risk in such projects, which could impact the intended benefits and potentially increase costs. Cybersecurity risks are also paramount, given the sensitive nature of health data. Ensuring robust change management and stakeholder engagement across all facilities will be critical to mitigating these risks.
What is the historical spending pattern for MHS Genesis or similar EHR modernization efforts within the DoD?
The MHS Genesis program represents a significant and ongoing investment by the Department of Defense in modernizing its electronic health record system. Historical spending patterns for this program have been substantial, reflecting the complexity and scope of replacing disparate legacy systems with a unified platform. Prior to this $250 million award, considerable funds have already been allocated for development, initial deployments, and related services. Analyzing historical spending trends for MHS Genesis, including appropriations and actual expenditures over the years, provides context for the current contract's value and helps in forecasting future sustainment and upgrade costs. Comparisons with other large federal EHR initiatives, like those in the VA or civilian agencies, can also offer insights into typical cost trajectories for such ambitious projects.
What are the potential performance implications if the contractor, Leidos, fails to meet the contract's objectives?
If Leidos fails to meet the contract's objectives, the implications could be significant. Under a Fixed-Price Incentive (FPI) contract, failure to meet performance targets could result in financial penalties or reduced profit margins for Leidos, as the incentive fee would be negatively impacted. More broadly, delays in the MHS Genesis deployment could hinder the intended benefits of improved healthcare coordination, patient safety, and operational efficiency for military personnel and their families. This could lead to continued reliance on outdated systems, potential data fragmentation, and reduced readiness. The government may also have options to exercise contract remedies, depending on the severity and nature of the performance failure, potentially including termination for default in extreme cases.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services
Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Parent Company: Leidos Holdings, Inc.
Address: 1750 PRESIDENTS ST, RESTON, VA, 20190
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $25,020,962
Exercised Options: $25,020,962
Current Obligation: $25,020,962
Subaward Activity
Number of Subawards: 23
Total Subaward Amount: $12,678,157
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N0003915D0044
IDV Type: IDC
Timeline
Start Date: 2020-05-29
Current End Date: 2026-01-31
Potential End Date: 2026-01-31 00:00:00
Last Modified: 2025-11-05
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