Cost overruns, delays plague VA’s new integrated financial management system
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The rollout of VA’s modernized financial management and acquisition system has been affected by delays in the department’s new electronic health record system, since “multiple deployments” depend on the EHR’s launch at medical facilities.
The Department of Veterans Affairs has followed “leading practices” as it works to modernize its outdated financial management system but has still faced cost overruns and scheduling delays, the Government Accountability Office said in a report released on Tuesday.
VA’s financial management system — which helps administer benefits programs for veterans and their beneficiaries — is more than 30 years old, with department officials complaining that it is inefficient and difficult to maintain.
GAO noted that VA previously attempted to replace the legacy system twice since 1998, but that those efforts “failed after years of development and hundreds of millions of dollars in cost.”
Hoping to right these aborted efforts, VA launched a new initiative in 2016 to create an integrated system for both its financial management and acquisition systems. The new network, known as the Integrated Financial and Acquisition Management System, or iFAMS, is expected to serve as “an enterprise resource planning cloud solution.”
GAO noted, however, that the initiative has faced growing cost overruns since its conception.
“Total estimated iFAMS implementation costs increased from $2.5 billion for its 2019 life cycle cost estimate to $7.5 billion for its 2022 life cycle cost estimate,” the report said, although it noted that “nearly half the cost increase from 2019 to 2022 is due to including 18 years of additional operations and support costs for the full iFAMS projected useful life.”
After conducting this estimate, GAO found that the system’s “October 2023 cost estimate increased by approximately $200 million over the 2022 estimate to $7.7 billion.”
VA officials told the watchdog the increase was the result of “additional projected contract costs for its business intelligence reporting tool and increases in current contract cost for program deployments.”
Although VA estimated that the new system would be fully implemented by 2030, GAO’s analysis also warned that “this date is questionable,” since officials have “not yet determined final implementation dates for multiple deployments at [the Veterans Benefits Administration] and Veterans Health Administration that affect its timeline.” In 2020, VA officials said iFAMS would be deployed by 2028.
Another factor affecting the iFAMS implementation schedule is that “multiple deployments depend on other currently paused or delayed VA IT modernization efforts, such as Electronic Health Record Modernization.”
VA’s effort to implement a new Oracle Cerner EHR system at all of its medical facilities has also faced its own cost overruns and technical challenges. The department implemented a “reset period” last year that paused most deployments of the new software, which has only been rolled out at six medical facilities since 2020.
GAO also reiterated prior recommendations it made for VA to establish “reliable cost and schedule estimates” and develop “target values for customer experience metrics” to measure progress over time.
Although GAO found that “VA's risk management policies and procedures were consistent with leading practices,” it also recommended that officials take further steps to “develop more comprehensive risk response plans to help mitigate risks related to systems integration with other IT modernization projects.”
VA concurred with the watchdog’s recommendation and said it also submitted documents to GAO outlining its goals for operational and customer experience metrics.