Defunct Defense-VA Health Record Office Spent Bulk of Budget on Support Contracts

The now moribund interagency program office charged with developing an integrated electronic health record for the Defense and Veterans Affairs departments spent $1.1 billion during its five year life, with the bulk of that going to support service contracts, based on a Nextgov review of Pentagon reports to Congress and testimony.

The two departments in February ditched efforts to develop the iEHR after costs spiraled to $28 billion and decided to pursue modernization efforts on their own.

The interagency program office, or IPO, sent Congress its latest report, which covered fiscal year 2012, on Oct. 23, 2013, a month after its director, Barclay Butler, left and operations sputtered to a halt. There was no mention of these changes in the report.

The latest report, signed last month by Theresa Cullen, then-acting deputy director of the IPO, disclosed total 2012 spending of $351.9 million, with $329.2 million for support services contracts. 

At the end of 2012, the IPO had filled 141 of 236 staff positions with either with permanent federal civilian employees or Defense and VA employees on detailed assignments to the IPO, supported by 171 contractor employees. Government staff costs totaled $19.3 million in 2012, the IPO reported to Congress.

On Feb. 27, VA’s then-Chief Information Officer Roger Baker told a hearing of the House Veterans Affairs Committee that the IPO had “several hundred contractor employees,” 135 federal employees, and planned to spend $758 million in fiscal 2013.

The IPO budgets in 2012 and 2013 dwarfed spending in its early years: $6.9 million in 2009; $10.6 million in 2010; and $14 million in 2011, for a three year total of $31.5 million.

The IPO reports to Congress show that in those three years support service contracts accounted for the majority of spending: $5 million in 2009; $6.9 million in 2010; and $10.2 million in 2011. Details on support service contracts in fiscal 2013 are not available.

From 2009 through 2011 the reports to Congress disclosed that the IPO faced staffing problems, which included a “lengthy recruiting and vetting process.” In its 2011 report, the IPO said it faced bureaucratic impediments to its work and was “continually challenged to coordinate joint documents, polices, and decisions through both departments for senior leadership approval in a timely manner.”

In 2011, the IPO said it developed an integrated acquisition strategy for the iEHR. By 2012, it had developed an acquisition schedule and set up a critical design review for the iEHR service-oriented architecture. In 2012 the IPO said it also awarded a key contract for a health data dictionary to 3M Health; fine-tuned a clinician graphic user interface; set up a clinical requirements division to engage doctors and patients in iEHR development; and adopted an iterative, “agile” development process.

These joint efforts were scuttled by  decision by both Defense and VA to pursue their own health record modernization. Defense plans to spend between $4 billion and $5 billion to acquire a commercial electronic health record with initial fielding in 2017. VA plans to upgrade its existing Veterans Health Information Systems and Technology Architecture system in a separate effort.

Congress mandated establishment of the IPO in the National Defense Authorization Act of 2008. Maureen Schumann, a Pentagon spokeswoman, told Nextgov earlier this week that Defense and VA are in the early stages of developing a revised charter and organizational chart of the office.

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