VA boosts EHR modernization contract with Oracle by $17B

Oracle’s contract with the Department of Veterans Affairs for the agency’s new electronic health record system will increase by almost $17 billion as part of a modified agreement, according to an award notice posted on SAM.gov on Wednesday. 

VA first contracted with Cerner in 2018 to upgrade its health record system. Oracle subsequently acquired Cerner in 2022 and rebranded the combined unit as Oracle Health.

The announcement comes after VA published a notice last week detailing plans to extend its EHR modernization contract with Oracle for an additional three one-year optional ordering periods. The award increase will now bump up the contract’s total value from just under $10 billion to roughly $27 billion.

“Specifically, this modification will increase the overall contract ceiling and extend the Period of Performance,” last week’s contract modification documents said. “This action is necessary to continue [electronic health record modernization] deployment activities and associated support services until all VA Medical Centers (VAMCs) and related facilities have fully transitioned to the EHR system.”

The agency’s modernization project — part of a broader federal effort to deploy a streamlined, interoperable EHR across VA, the Pentagon, the Coast Guard and the National Oceanic and Atmospheric Administration — has been beset by cost overruns, technical glitches and usability concerns since the first software go live occurred in 2020. 

Ongoing issues ultimately led to VA and Oracle renegotiating their contract in May 2023, with the deal being modified from an additional five-year term to five one-year terms. The latest modified agreement now has the ability to cover work through May 2031.

VA said extending its agreement with Oracle was necessary because “unanticipated complexities” slowed software deployments, which resulted in the contract’s ceiling being reached “sooner than originally planned.” The agency added that it “anticipates using the remaining ceiling by the first quarter of fiscal year 2027.”

VA paused most deployments of the new EHR system in April 2023 to remedy the problems slowing software rollouts across its network of 164 medical facilities. The agency announced plans at the tail end of the Biden administration in December 2024 to restart system go-lives at four Michigan-based medical sites in mid-2026. 

Current VA Secretary Doug Collins — who has called the EHR modernization project a priority — subsequently added nine additional medical facilities to VA’s 2026 deployment schedule, bringing the total number of site rollouts this year to 13. VA officials previously said they are hoping to finish EHR system deployments at every one of the agency’s medical facilities by 2031.