Little doubt VA has authority to sole-source multi-billion dollar deal with Cerner

To make a sole-source award worth billions to Cerner, Veterans Affairs relied on the public interest exemption of the Competition in Contracting Act.

One of the common questions I’ve heard since Veterans Affairs announced that it was giving a sole-source contract to Cerner to supply an electronic health records system is whether VA can really do that.

After all, this would be a no-competition contract worth billions of dollars.

Well, the short answer is, yes they have the authority and it rests in a provision of the Competition in Contracting Act. The regulations implementing the law set out several exemptions from competition.

The VA decision seems to fall primarily in the seventh and last exemption in the regulations: Public interest.

VA Secretary David Shulkin said as much in his statement when he talked about the critical need for veterans to have an electronic health record that is compatible with the system the Defense Department is installing using Cerner’s products and Leidos’ integration skills.

So far it doesn’t appear that Leidos is part of the sole-source contract yet, which raises the question of whether VA will run a competition for integration and implementation services. VA is not commenting and Leidos referred those questions back to VA.

A statement from Cerner says that the company will build a “team of innovative and experienced partners” to work on the VA project.

Now just because VA has the authority, the decision isn’t bullet proof. Another company, such as Epic, a competing electronic health records firm, could file a protest with the Government Accountability Office. But this is probably a long shot. GAO has only heard two protests involving this kind of exemption from competition.

The one closest to the VA-Cerner decision involved the purchase of Russian helicopters for the Afghanistan Air Force in 2010. Sikorsky filed a protest arguing that the U.S. Navy had improperly limited the competition. The Navy said it was in the public interest to go with the Russian helicopters because of the amount of experience the Afghanistan Air Force had with the aircraft because they had been flying them and maintaining them since the 1980s. The U.S. Navy said it would take three years to retrain everyone to use a different helicopter.

GAO sided with the Navy and denied the protest.

In the second protest, the Air Force signed a sole source contract for food services using the public interest justification but this time GAO sided with the protestor. The Air Force declined GAO’s recommendation to compete the work.

Given that the Defense Department has already picked Cerner and it has been a long time goal of the government to have an integrated health record that can follow someone from military service into the VA system, it might be a long shot to get GAO to reject VA’s decision.

We won’t have long to wait because like any protest there is a 10-day window for filing. Given the level of detail in Shulkin’s announcement, the clock likely started on Monday. I’m still looking for the release of the determination and findings document that he signed. If there is something new of substance in that document, the clock could restart.

VA is obligated to publish the document, according to the regulations.

Our sister publication FCW.com reported that VA wants to finalize a contact with Cerner in the next three to six months. During that time the department hopes to have an implementation plan in place.

Christopher Miller, who led the Defense Department’s effort to buy the Cerner-Leidos solution, has become a special advisor to VA’s CIO. The VA Office of Information and Technology also is creating a program executive office to oversee the project.

The VA project is massive, even compared the DOD’s $4.3 billion project with Cerner and Leidos. One estimate, reported by FCW.com, put the value at $16 billion.

But it seems that VA is solidly on a path forward. The next question is whether it will be Leidos or another company that will be Cerner’s partner. And how will VA or Cerner make that choice? Stay tuned.

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