Leidos, Cerner win Pentagon EHR contract

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A team led by Leidos and Kansas City, Missouri-based Cerner Corp. has won the highly coveted contract to implement the electronic health record system for the Department of Defense.

The Defense Healthcare Management System Modernization contract is worth $4.3 billion for its first phase of two years. There are two additional three-year option periods, as well as a potential two-year award term. The system will be installed at 55 hospitals nationwide, as well as at more than 600 clinics. Estimates for the contract ran as high as $11 billion, but the overall value of the contract could be less than $9 billion, according to Undersecretary of Defense for Acquisition, Technology and Logistics Frank Kendall.

Training will also be included in the contract, according to DoD News.

"The trick ... in getting a business system fielded isn't about the product you're buying, it's about the training, the preparation of your people, it's about minimizing the changes to the software that you're buying," Kendall said. "We've done a lot of work to ensure that our users ... are prepared to take on this product and use it."

Leidos and Cerner, which teamed with Accenture Federal, beat out two other finalists: Epic, with IBM and Impact Advisors, and Allscripts, which teamed with Computer Sciences Corp. and Hewlett Packard (HP).

Another team eliminated from contention for the contract earlier this year was PwC, which was bidding with Google, MedicaSoft, General Dynamics Technology, DSS, Inc. and Medsphere. That team was using code from the Department of Veterans Affairs' VistA EHR.

The Pentagon already has familiarity with both Cerner and Leidos; in July, the former was chosen by the Defense Health Agency to replace the pathology laboratory information system used by the Military Health System.

And in May 2014, the DoD awarded Leidos a $70.7 million sole source bridge contract to support its current EHR system for 11 months. Leidos, previously known as Science Applications International Corporation (SAIC), managed clinician order entries for the Pentagon via a $1 billion Composite Health Care System contract in 1988; it won additional contracts in 2009 and 2011 to continue its work, according to Nextgov.

The DoD's decision to purchase an off-the-shelf EHR product is one that has been met with a degree of skepticism, with concerns looming about potential interoperability issues with systems from other hospitals. For instance, at a Senate hearing in May, National Coordinator for Health IT Karen DeSalvo was asked why the Pentagon would choose to purchase a system from a team led by a company already identified by the federal government to lack interoperability.

And in March, Loren Thompson, COO at the nonprofit Lexington Institute, criticized the approach of buying an EHR for being "antiquated."

"Before committing to the biggest investment in a new health record system in American history, congressional authorizers and appropriators ought to be asking the Pentagon whether it really understands what it is buying," he wrote.

The procurement process for the new system spanned exactly 18 months; the Pentagon released a draft request for proposals on Jan. 29, 2014.

"Today is not just about picking a software vendor," said Christopher A. Miller, the Defense Healthcare Management Systems program executive officer. "Today is really about making sure we provide the right team that will provide the services and all those things that are necessary to meet our objectives."

To learn more:
- here are the contract terms
- here's the DoD News post

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