Rival Challenges Award Of Veteran Affairs Contract To Cerner Corp.

Aug 22, 2017

A provider of electronic health records systems for the U.S. Department of Defense is challenging the contract awarded to Cerner Corp. to develop the next-generation electronic health records system (EHR) for the U.S. Department of Veteran Affairs.

The VA awarded the contract to Cerner in June without competitive bidding, under a “public interest” exception to federal contracting regulations.

In awarding the contract to the Kansas City-based company, VA Secretary Dr. David Shulkin said it was important that both the Defense Department and VA use the same electronic health record system. The two organizations have long used different systems, forcing them to spend hundreds of millions of dollars on getting them to communicate with one another.

In 2015, the Defense Department awarded Cerner a contract to update its electronic health record system. That contract is estimated to be worth $4.3 billion. The value of the VA contract is unknown, but it’s thought to be in the hundreds of millions of dollars.

The challenge to the Cerner/VA contract was brought by San Diego-based CliniComp International Inc., which sued the government in the U.S. Court of Federal Claims in Washington, D.C., last week. The court hears claims for monetary damages against the U.S. government.

“Since the next generation EHR is high risk and because multiple award development contracts are a proven means to reduce risks, the failure of Secretary Shulkin’s decision to consider prudent risk reduction renders the sole source decision unreasonable,” CliniComp says in its lawsuit.

CliniComp says its electronic health record system is in use at 56 Department of Defense health care facilities and more than 40 VA health care facilities.

CliniComp wants the court to order the VA to solicit offers from multiple sources.

A spokesperson for Cerner referred questions to the Department of Justice’s Office of Public Affairs. A spokeswoman for the department, Nicole Navas Oxman, said in an email that the government made its initial court appearance today in a sealed proceeding and that the court has issued a scheduling order for the case. 

The VA’s decision to dispense with requests for proposals, the usual route when large-scale contracts are being solicited, surprised many healthcare experts.

A leaked audio file to Wired magazine may explain the speed with which the contract was awarded.

In the audio, Jared Kushner, President Donald Trump’s son-in-law and senior advisor, is heard telling congressional interns that the Cerner/VA deal was “one of the great successes we’ve had so far” in overhauling the VA.

Kushner said he talked about the issue with Shulkin and Secretary of Defense James Mattis, who convened top electronic health records experts from each department.

“We said, guys, we want a solution to get us on one system. This is absolutely crazy,” Kushner is heard telling the congressional interns on the recording. “They came back in two weeks with something that made a lot of sense.”

“So it’s been 16 years and nothing’s happened,” Kushner said. “We finally got everyone on the same page, and within two months started planning the migration of the whole system.”

Dan Margolies is KCUR’s health editor. You can reach him on Twitter @DanMargolies.