VA, Oracle Cerner agree on modified contract for troubled computer system tested in Spokane

WASHINGTON – The Department of Veterans Affairs on Tuesday announced it renegotiated its $10 billion contract with the tech giant Oracle to adopt the company’s Cerner electronic health record system in the nation’s VA hospitals and clinics, indicating that the troubled computer system will remain in use in the Inland Northwest for at least the next year.

The Oracle Cerner system, which was first launched at Spokane’s Mann-Grandstaff VA Medical Center and several Inland Northwest clinics in October 2020, has been beset by problems that have contributed to more than 150 cases of harm and the deaths of four veterans, VA officials have confirmed. The contract, signed in May 2018, originally was supposed to last 10 years with a five-year option period that expired Tuesday.

“VA has reached an agreement on a modified contract with Oracle Cerner to deliver the high-functioning, high-reliability, world-class electronic health record that Veterans deserve,” the department said in a news release, adding that the reworked contract “dramatically increases VA’s ability to hold Oracle Cerner accountable across a variety of key areas.”

After pausing the system’s rollout in 2021 in response to problems that arose in Spokane, the VA launched it at other facilities across the Inland Northwest, southern Oregon and central Ohio in the first half of 2022, with VA leaders saying it was safe. When The Spokesman-Review revealed in June 2022 that the system had harmed veterans and two top VA officials had withheld that information from Congress, the department postponed its launch at other sites. Those officials resigned earlier this year.

The restructured contract, according to the news release, aims to minimize the system outages that have hamstrung health care providers, address problems identified by users more quickly and improve how the system interacts with non-VA hospitals and the rest of the Veterans Health Administration, which still uses a separate electronic health record system.

In each of those areas, the department said, the contract now includes “stronger performance metrics and expectations” and larger financial penalties for Oracle if the company falls short. The VA declined to share specific information on the 28 metrics it said are now built into the contract, but the news release said Oracle would have forfeited about 30 times more money under the new contract terms for the hundreds of outages and other “major incidents” that hit the system in the past two-and-a-half years.

“This new agreement reflects Oracle’s commitment to Veterans’ health care as well as complete confidence in our technology and our partnership with the VA to deliver an EHR that far exceeds the expectations of users,” Mike Sicilia, the executive vice president of Oracle Global Industries, said in a statement, using the acronym for electronic health record.

On Capitol Hill, leaders of the House and Senate VA Committees welcomed the news with cautious optimism.

Rather than another five-year contract term, the contract will continue in five single-year terms, with the chance to renegotiate it next year. In a joint statement, the Republican chairmen of the House committee and the subcommittee charged with oversight of the system, Reps. Mike Bost of Illinois and Matt Rosendale of Montana, called that structure “an encouraging first step,” but added that “veterans and taxpayers need more than a wink and a nod that the project will improve.”

“While we appreciate that VA is starting to build accountability into the Oracle Cerner contract, the main questions we have about what will be different going forward remain unanswered,” Bost and Rosendale said. “We need to see how the division of labor between Oracle, VA and other companies is going to change and translate into better outcomes for veterans and savings for taxpayers.”

Sen. Jon Tester of Montana, the Democratic chair of the Senate VA Committee, promised to “keep holding VA and Oracle Cerner’s feet to the fire” while working to pass a bipartisan bill to put additional guardrails on the project. He said the contract was a “step in the direction” toward a system that delivers for veterans, VA staff and taxpayers.

“But this is just the start of what’s needed to get this program working in a way deserving of our veterans and taxpayers,” Tester said in a statement.

Sen. Jerry Moran of Kansas, the top Republican on the Senate VA Committee who has introduced his own bill aimed at fixing the system’s rollout, agreed the contract changes are positive, but said the system requires “a major overhaul.”

“Our veterans deserve the best care our country can offer, and I will continue working to make certain this program works for our veterans,” Moran said in a statement.