Will Leidos get a cut of Cerner's new VA health record deal?

Veterans Affairs has decided to contract directly with Cerner Corp. to replace the agency's VistA system with the same electronic health record software that the Defense Department is installing.

Leidos is the prime on the DOD project known as Military Health System Genesis, a 10-year deal worth up to $4.5 billion. Cerner is the primary partner of Leidos on Genesis.

But in VA Secretary David Shulkin’s announcement today he made no mention of Leidos, only that VA wanted the Cerner system so it could be interoperable with DOD.

The value of the work with VA could be significantly larger than the Leidos-Cerner work at DOD, given that VA’s patient population is much larger than DOD. VA provides health care services to 27 million veterans.

"VA's adoption of the same EHR system as DOD will ultimately result in all patient data residing in one common system and enable seamless care between the departments without the manual and electronic exchange and reconciliation of data between two separate systems," he said.

VA is issuing a solicitation directly to Cerner. VA says it doesn't have the time to go through the same kind of procurement process DOD went through before it awarded the Genesis contract to Leidos in 2014. Skulkin said it took DOD 26 months from requirements to award.

“We simply can’t afford to wait that long when it comes to the health of our veterans,” he said in a statement.

But it begs the question of what Leidos’ role will be. The company hasn’t responded to a request for comment.

While VA is adopting the same Cerner software, it won’t be identical with what DOD is implementing but it will be on a similar Cerner platform, Skulkin said. In addition to being interoperable with DOD, VA also has outside providers and health systems it needs to share data with.

In his announcement, Skulkin made no reference to the dollar value of the contract with Cerner.

It is possible that VA will run a competition for implementation services through its VA Transformation 21 Technology Next Generation contract. Leidos is one of many primes on that multiple award task order contract, so it could bid on the work.

Theoretically, a competition through the T4NG contract could be relatively quick given that VA has already picked its technology platform.

The VA determination and findings document for the Cerner deal has not be released publicly that I can find, but the document will have to outline the steps VA took to determine that a no competition approach was in the department’s best interest.

There also likely will be a comment period before the deal is finalized.

Also, these type of decisions are subject to protests at the Government Accountability Office as well as the Court of Federal Claims.

While many are hailing VA’s move toward a commercial platform, there are still a lot of unanswered questions.

For more coverage, see our sister publication FCW.com.