VA Wasted $1.1 Billion on Failed IT Projects in Six Years

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The department gave the bulk of the billion to 15 contractors—one of which is getting a sole-source $10 billion contract to try again.

The Veterans Affairs Department wasted more than a billion dollars over six years attempting to upgrade its electronic health records system before scrapping the projects in June, according to a congressional watchdog.

Fifteen individual contractors received about two-thirds of the money spent during that period, and the remaining funds were distributed among 123 other firms. The VA has since announced plans to give one of those 15 major contractors, Cerner Corp., another crack at modernizing the agency’s health IT with a sole-source $10 billion contract to rebuild its medical record management platform.

The Government Accountability Office found that VA paid out roughly $1.1 billion between fiscal 2011 and 2016 to contractors working to update the agency’s outdated Veterans Information Systems and Technology Architecture system. The agency has relied on the platform to manage health records for its 9 million beneficiaries since the 1980s.

VA attempted repeatedly to modernize VistA and make it interoperable with the Defense Department’s electronic health records system. The GAO analysis covered two projects, iEHR and the more recent VistA Evolution initiative that VA Secretary David Shulkin scrapped in favor of the Cerner deal.

The single biggest contractor between 2011 and 2016 was ASM Research, which received a combined $162.6 million for work on the two modernization efforts. Systems Made Simple Inc. stood as the next highest-paid contractor, receiving $92 million mostly for work on VistA Evolution, followed by HP Enterprise Services with $81.9 million in contracts between both projects.

Other top contractors included Booz Allen Hamilton and the MITRE Corporation.

Cerner Corp. ranked as the 13th highest-paid contractor with awards for the two projects totalling $13.4 million. In June, Shulkin selected Cerner for what could be a $10 billion deal to put VA on the same electronic health records platform as DOD, an overhaul VA acting Chief Information Officer Scott Blackburn called one of the biggest IT implementations in history.

Blackburn defended the agency’s decision to award Cerner the massive contract on Thursday before a House Oversight and Government Reform subcommittee. Cerner is already developing the Defense Department’s MHS Genesis platform and implementing the same platform at VA would allow health officials to “seamlessly” transfer medical records between the two agencies, he said.

The new platform would be rolled out over the next 10 years with the initial deployment coming in the next 18 months, he said.

The Cerner project will also help advance VA’s efforts to address key FITARA-related issues highlighted by the GAO report, according to Blackburn. Migrating from the highly customized VistA system to a primarily commercial platform through Cerner will enable the agency to drastically reduce its reliance on data centers, he said.

VA received an overall B+ on the 2017 FITARA Scorecard—an oversight tool that grades IT acquisition reform compliance—but got an F in the data center optimization category. Blackburn said he believes the new health records platform will allow VA to reduce its number of core data centers from more than 400 to just 14 by 2020.

While lawmakers balked at the seemingly unrealistic goal, GAO Director of IT Issues David Powner, who authored the VA report, noted the plan might be more feasible than it appears. Such gains in consolidation would also justify the Cerner contract’s massive price-tag, he said.

“Data center consolidation really needs to go hand-in-hand with the migration to this commercial Cerner project,” he said. “We’re spending a lot of money, but we could get a huge return from a data center point of view.”

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