VA signs $10B deal with Cerner

NOTE: A version of this article first appeared on FCW.com

The Department of Veterans Affairs is finally in business on its plan to replace its homegrown electronic health records system.

Almost a year after the department announced its plan to sole-source the modernization effort to Cerner, which is the software undergirding the Pentagon's new system, acting VA Secretary Robert Wilkie signed a $10 billion contract on May 17.

"This is one of the largest IT contracts in the federal government, with a ceiling of $10 billion over 10 years," Wilkie said in a statement. "And with a contract of that size, you can understand why former Secretary Shulkin and I took some extra time to do our due diligence and make sure the contract does what the President wanted."

Former VA Secretary Shulkin announced plans to move to Cerner in June 2017. Eventually, the VA sought and obtained from Congress a separate budget line outside of the Office of Information and Technology to implement the modernization effort.

The VA already has $782 million in FY 2018 money, about $500 million of which is going to Cerner for a down payment on the system, according to former VA officials familiar with the contract.

Congress is expected to supply $1.4 billion in FY 2019 to support the project.

The $10 billion to Cerner is only part of the story. Infrastructure updates and program management are expected to add another $6 billion to the project's total cost.

The decision comes as the MHS Genesis system, being implemented by the Department of Defense at three sites in the Pacific Northwest, is on pause while officials cope with problems that have rendered the system unfit for use, according to an internal oversight report.

Wilkie alluded to ongoing problems with the system in a statement, noting that "VA and DoD are collaborating closely to ensure lessons learned at DoD sites will be implemented in future deployments at DoD as well as VA."