Pentagon Accepts Bids on Long-Awaited Health Records Contract

Army Maj. (Dr.) Tim Cheslock examines a patient and fellow soldier at the primary care New Kabul Compound clinic in Afghanistan.

Army Maj. (Dr.) Tim Cheslock examines a patient and fellow soldier at the primary care New Kabul Compound clinic in Afghanistan. U.S. Army

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The solicitation is the first step in what could be an $11 billion effort over the next decade to modernize the Pentagon's health records system.

The Defense Department on Monday opened its Healthcare Management Systems Modernization contract to bids, beginning what could be an $11 billion effort over the next decade to modernize the way the Pentagon provides health care to service members.

DOD’s goal is to use this single award contract to eventually replace the entirety of its legacy clinical systems, including the Armed Forces Health Longitudinal Technology Application, or AHLTA, which provide health care services for 9.8 million beneficiaries.

"We are not just buying an off-the-shelf system; we're really looking to modernize how the department delivers health care," said Christopher Miller, program executive officer for the Defense Healthcare Management Systems. "Ultimately, program success will result in continued improvement in patient safety, quality of care and readiness of forces worldwide."

Because of the scope and size of the effort – and because of the very ugly public rollout last year of the, the last high-profile government tech procurement – DHMSM is likely to be highly scrutinized, so the Pentagon has been careful to be as meticulously transparent as possible prior to the contract’s release.

Over the past year, the Pentagon held four industry days, released three draft solicitations and answered more than 2,000 questions – 1,500 of which came directly from industry.

DOD Officials Will Take Their Time Evaluating Bids

The interest in the contract buildup led to unique partnerships between systems integrators and electronic health records providers, with a large focus on solving the interoperability problems inherent in DOD’s legacy health records systems. Major data gaps in patient records frequently occur when health care is delivered to DOD beneficiaries outside of the DOD network. That’s been a big problem considering about half of the nearly 10 million DOD beneficiaries choose their care outside the network.

"Last May, Secretary Hagel decided the best way forward was to pursue a full and open competition to modernize our electronic health record system," said Frank Kendall, undersecretary of defense for acquisition, technology and logistics.  "Modernizing our system will allow us to better serve our beneficiaries and clinicians; it will update software and improve our ability to share health data with the private sector and the Department of Veterans Affairs."

The Pentagon will accept bids through Oct. 9, and its source-selection team – composed of DOD civilians, military personnel and a slew of subject matter and procurement experts – will take its time evaluating bids.

The award of its new electronic health records – or EHR -- system is expected by the third quarter of 2015. According to contracting documents, the Pentagon would like to have initial operational capabilities by the end of 2016 in the Puget Sound region, which has some 7,000 employees.

Until last year, DOD and VA had worked to integrate their electronic health records systems, but that plan was scrapped in February 2013 after cost overruns and estimated costs ballooned to tens of billions of dollars.

In publicly released documents Monday, the Pentagon stated it would “continue efforts to improve interoperability [with VA] through a series of focused data sharing initiatives to meet our goal to create a seamless health record integrating VA and DOD data.”