VA kills $100M contract at heart of e-health record system

Thursday - 3/1/2012, 6:01pm EST

The Department of Veterans Affairs has terminated a $102 million contract central to its attempt to build an integrated digital health record system with the Defense Department, citing an investigation into a subcontractor's alleged conflicts of interest.

VA would not comment on the reasons for the contract termination, but contractor ASM Research released a statement saying the agency's decision was based on the investigation's findings.

Last month, VA awarded the contract to ASM Research under its multibillion-dollar IT program, T4. ASM Research was to build a central hub, called an Enterprise Service Bus, that would allow the two departments' health-records systems to communicate with each other.

It was the first major contract awarded in the integrated digital health-record system and would have been the "heart" of the integrated electronic health record (iEHR) system, according to VA Assistant Secretary for Information and Technology and Chief Information Officer Roger Baker.

"It's a huge strategic decision for the VA and the DoD," Baker said of awarding the contract. He spoke to reporters last week. At that time, he said, he did not know of the contract's status.

The Enterprise Service Bus was the biggest contract ever awarded to Virginia-based ASM Research in its 33 years of working with the government.

"This has never happened before and I've been here for 26 years," said President and Chief Operating Officer John Fraser. "It was a sad day."

Fraser said he had received a letter from VA outlining the investigation's findings, but was prohibited by the terms of the contract from disclosing more information.

As far as he knew, the allegations focused on just one of roughly 10 subcontractors on this project.

The agency says it will determine as soon as possible its next steps for procuring the part.

The separate VA and Defense health-care systems have led to confusion and frustration among patients, according to a recent Government Accountability Office report. Both agencies often assign case managers or care coordinators to the same patient.

The agencies have made it a priority to create a unified system in which a service member can have one electronic record throughout their career and beyond.

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