VA's $725M EHR modernization program management contract awarded to Booz Allen Hamilton shows mixed value and competition

Contract Overview

Contract Amount: $724,839,423 ($724.8M)

Contractor: Booz Allen Hamilton Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2017-09-28

End Date: 2023-01-15

Contract Duration: 1,935 days

Daily Burn Rate: $374.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: IGF::OT::IGF TRANSFORMATION TWENTY-ONE TOTAL TECHNOLOGY NEXT GENERATION (T4NG) TASK ORDER FOR ELECTRONIC HEALTH RECORD MODERNIZATION PROGRAM MANAGEMENT OFFICE SUPPORT.

Place of Performance

Location: RED BANK, MONMOUTH County, NEW JERSEY, 07701

State: New Jersey Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $724.8 million to BOOZ ALLEN HAMILTON INC for work described as: IGF::OT::IGF TRANSFORMATION TWENTY-ONE TOTAL TECHNOLOGY NEXT GENERATION (T4NG) TASK ORDER FOR ELECTRONIC HEALTH RECORD MODERNIZATION PROGRAM MANAGEMENT OFFICE SUPPORT. Key points: 1. The contract's value proposition is fair, with a per-unit cost benchmark that is not readily available but appears within a reasonable range for complex IT program management. 2. Competition was robust, indicating potential for price discovery, though the specific impact on final pricing requires deeper analysis. 3. Risk indicators are moderate, primarily related to the complexity of EHR modernization and the long duration of the contract. 4. Performance context suggests a significant undertaking in modernizing a critical healthcare system, with potential for substantial public impact. 5. The contract falls within the IT services sector, specifically focusing on computer systems design and program management for healthcare IT. 6. The absence of small business set-asides or subcontracting plans warrants further examination regarding broader economic impact.

Value Assessment

Rating: fair

The contract's value is assessed as fair. While the total award amount is substantial, it covers a significant period and scope of work for a critical IT modernization program. Benchmarking against similar large-scale federal IT program management contracts suggests that the overall cost is within an expected range, considering the complexity and duration. However, without granular data on specific deliverables and their associated costs, a precise value-for-money assessment is challenging. The Time and Materials pricing structure also introduces some variability that needs careful monitoring.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of six bidders suggests a healthy level of competition for this significant IT program management requirement. This broad competition is generally favorable for price discovery and ensures that the government has access to a range of qualified contractors. The specific details of the bidding process and the evaluation criteria would provide further insight into how effectively this competition translated into optimal pricing and performance.

Taxpayer Impact: The full and open competition process is beneficial for taxpayers as it increases the likelihood of securing services at competitive prices and encourages contractors to offer their best value propositions.

Public Impact

Veterans will benefit from the intended modernization of the Electronic Health Record (EHR) system, aiming for improved healthcare delivery and data management. The contract supports program management services essential for the successful implementation of the VA's EHR Modernization Program. The geographic impact is national, as the EHR system serves veterans across all VA facilities. Workforce implications include the potential for specialized IT and program management roles within the VA and its contractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the long duration and complexity of EHR modernization.
Risk of vendor lock-in or over-reliance on a single contractor for critical program management functions.
Challenges in ensuring seamless integration with existing VA systems and workflows.
The Time and Materials contract type can lead to unpredictable costs if not managed stringently.

Positive Signals

Awarded through full and open competition, suggesting a competitive selection process.
Booz Allen Hamilton is a large, established contractor with significant experience in government IT services.
The contract supports a critical national initiative for improving veteran healthcare.
The program management focus aims to bring structure and oversight to a complex modernization effort.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically in computer systems design and related services. The market for federal IT services, particularly in healthcare, is substantial and highly competitive. This contract represents a significant investment by the Department of Veterans Affairs in modernizing its core healthcare IT infrastructure. Comparable spending benchmarks in this area are difficult to pinpoint precisely due to the unique nature of EHR modernization, but large-scale IT transformation projects often involve hundreds of millions of dollars over several years.

Small Business Impact

This contract does not appear to have specific small business set-aside provisions, nor is there explicit information regarding subcontracting goals for small businesses. The prime contractor, Booz Allen Hamilton, is a large business. This suggests that the direct economic impact on the small business ecosystem through this specific contract may be limited unless subcontracting opportunities are actively pursued and awarded to small businesses. Further investigation into subcontracting plans would be necessary to fully assess the impact on small businesses.

Oversight & Accountability

Oversight for this contract is primarily managed by the Department of Veterans Affairs contracting and program management offices. Accountability measures are embedded within the contract's performance work statement and delivery schedules. Transparency is facilitated through contract award databases and reporting requirements. While no specific Inspector General (IG) jurisdiction is mentioned for this particular task order, the VA Office of Inspector General generally oversees VA programs and contracts for waste, fraud, and abuse.

Related Government Programs

VA Electronic Health Record Modernization Program
Department of Defense (DoD) EHR Modernization
Federal Health IT Initiatives
Large-Scale IT Program Management Contracts
Computer Systems Design Services

Risk Flags

Potential for cost overruns due to T&M pricing
Complexity of EHR modernization
Long contract duration
Lack of explicit small business subcontracting goals

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $724.8 million to BOOZ ALLEN HAMILTON INC. IGF::OT::IGF TRANSFORMATION TWENTY-ONE TOTAL TECHNOLOGY NEXT GENERATION (T4NG) TASK ORDER FOR ELECTRONIC HEALTH RECORD MODERNIZATION PROGRAM MANAGEMENT OFFICE SUPPORT.

Who is the contractor on this award?

The obligated recipient is BOOZ ALLEN HAMILTON 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 $724.8 million.

What is the period of performance?

Start: 2017-09-28. End: 2023-01-15.

What is the historical spending trend for similar EHR modernization program management support at the VA?

Historical spending on EHR modernization program management support at the VA has been substantial, reflecting the complexity and criticality of these initiatives. While specific figures for program management alone are often bundled within larger modernization efforts, the VA's overall investment in its EHR system has been in the billions of dollars over the past decade. This particular contract, valued at over $724 million, represents a significant portion of that investment dedicated to ensuring effective management and oversight of the modernization process. Previous contracts for similar support have also been awarded to large, experienced IT service providers, often through competitive processes, indicating a consistent approach to managing such large-scale technological transformations.

How does the per-unit cost of this contract compare to industry benchmarks for IT program management services?

Determining a precise per-unit cost for this contract is challenging due to its Time and Materials (T&M) pricing structure and the broad scope of program management services. T&M contracts do not have fixed unit prices for specific deliverables, making direct benchmarking difficult. However, based on the total award amount and the estimated duration, the average annual cost is approximately $110 million. For large-scale, complex IT program management in the federal sector, particularly for critical infrastructure like EHR systems, this figure is not inherently outliers. Industry benchmarks for IT program management consulting and support services vary widely based on the level of expertise, security clearances required, and the complexity of the project. Given the specialized nature of EHR modernization and the scale of the VA's operations, the cost appears to be within a reasonable, albeit high, range for such services.

What are the primary risks associated with this contract, and how are they being mitigated?

The primary risks associated with this contract revolve around the inherent complexity and long duration of EHR modernization projects. These include potential scope creep, integration challenges with existing legacy systems, cybersecurity threats, and the risk of cost overruns, especially given the T&M pricing model. Mitigation strategies typically involve robust project management methodologies, clear performance metrics, regular progress reviews, strong cybersecurity protocols, and vigilant oversight by the VA. The contract's structure, requiring detailed reporting and adherence to milestones, aims to keep the project on track. Furthermore, the selection of an experienced contractor like Booz Allen Hamilton is intended to leverage their expertise in managing such complex federal IT initiatives and mitigating associated risks.

What is the track record of Booz Allen Hamilton in managing large federal IT modernization contracts, particularly in healthcare?

Booz Allen Hamilton has a substantial track record in managing large federal IT modernization contracts across various agencies, including significant work within the healthcare sector. They have been involved in numerous large-scale IT transformation projects for government clients, often involving complex systems integration, cybersecurity, and program management. While their specific role in the VA's EHR modernization program is detailed in this task order, their broader experience includes supporting other federal health agencies and defense departments with their IT initiatives. Their long-standing presence in the federal contracting space and their extensive portfolio of IT services suggest a capability to handle the demands of such a critical and large-scale program, though performance on any specific contract is subject to ongoing evaluation.

How does the competition level for this contract influence its overall value and taxpayer benefit?

The fact that this contract was awarded under full and open competition with six bidders is a positive indicator for taxpayer benefit. A higher number of bidders generally leads to more competitive pricing as companies vie for the contract. It also increases the likelihood that the government selects the most capable and cost-effective solution. While the T&M pricing structure introduces some variability, the initial competitive award process helps establish a baseline for fair pricing. The ongoing performance and cost management by the VA will be crucial in ensuring that the competitive advantage gained during the award phase is sustained throughout the contract's life, ultimately maximizing value for taxpayers.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 6

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Booz Allen Hamilton Holding Corporation

Address: 1 CHRISTOPHER WAY, 13, EATONTOWN, NJ, 07724

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $724,839,423

Exercised Options: $724,839,423

Current Obligation: $724,839,423

Subaward Activity

Number of Subawards: 68

Total Subaward Amount: $121,960,166

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA11816D1007

IDV Type: IDC

Timeline