DOD to extend SAIC contract; other vendors question impact

Late last month the Defense Department said it planned to extend its contract for the $1 billion Composite Health Care System (CHCS), angering the health care automation industry but creating a potential boon for contractor Science Applications International Corp.

A notice published Jan. 23 in the Commerce Business Daily said personnel at the Defense Supply Service (DSS) will "conduct sole-source negotiations with SAIC for an interim contract" for military health care systems.

Officials at DOD and SAIC said negotiations between the two to extend their relationship had not yet begun, despite the impending expiration of the CHCS contract March 1. These sources refused to speculate on how much longer the eight-year deal will be stretched.

David Brooks, a senior vice president at SAIC and the company's CHCS program manager, said he understood the urgency of the negotiations but added that SAIC employees were still reviewing DOD's requirements. "We are trying to understand the needs of the government," he said. "We will propose as nearly as we can an arrangement that meets their needs and passes their scrutiny."

The deal could be a gold mine for SAIC because DSS has fallen far behind schedule in its attempts to award contracts for $900 million worth of equipment that was supposed to replace hardware offered under CHCS.

Although the Support Hardware and Automated Related Products (SHARP) contracts originally were slated for award this month, DSS personnel have not yet issued a final request for proposals.

The announcement had vendors who won last year's Defense Medical Information System/System Integration, Design, Development, Operations and Maintenance Services contracts questioning their roles vs. that of SAIC.

D/SIDDOMS vendors were slated to provide software development and other services to the department following the CHCS expiration.

Bob Pinto, national account manager for health care at PRC Inc., said it remained unclear last week whether DOD would delegate the work to PRC and the other D/SIDDOMS vendors or continue to give the work to SAIC.

"It does cause us a bit of concern because SAIC does have a strong incumbency position," Pinto said.

A DSS source, who requested anonymity, said other vendors who think they can meet the requirements for the interim contract may also send the agency capability statements. But the source added that it is "doubtful" the work would go to a vendor other than SAIC.

The source added that the SHARP RFP would probably come out "within the month" and estimated that the interim work would proceed "for about a year."

Brooks said DOD users can still order CHCS equipment this month that can be delivered as late as September.

Fred Steubar, vice president of Electronic Data Systems Corp.'s Federal Health Care Operations, said he understands DOD needs to award this bridge pact. "As long as it doesn't overlap with D/SIDDOMS, that's fine," he said. EDS is one of four prime contractors on the D/SIDDOMS contract.