The Department of Veterans Affairs (VA) Office of the Inspector General’s (OIG) investigation of the VA’s Electronic Health Records (EHR) modernization program has found an additional $2.5 billion in unreported IT infrastructure upgrade costs, which could put the program cost up to $5.1 billion more than estimated.

Members of a House subcommittee created specifically to rack IT project progress at VA reacted with dismay to the new findings and are set to hold a hearing later this month to look for answers.

Latest Cost Jump

In May 2018, VA took steps to replace its 30-year old health records system with a new system contracted at $10 billion over 10 years. This 2018 estimate included $4.3 billion in IT infrastructure costs. However, VA OIG’s July 7 report revealed that the $4.3 billion estimate is “not reliable,” as it did not account for $2.5 billion in “critical program-related IT infrastructure upgrade costs.”

“This lapse in reliable reporting occurred because certain IT infrastructure upgrade costs are assumed by VA’s Office of Information and Technology (OIT) and the Veterans Health Administration (VHA), and there were inadequate procedures for determining if a cost-estimate update is needed in the office’s congressionally mandated reports and, if so, when this update should occur,” the report says.

The OIG made six recommendations for VA’s Office of Electronic Health Record Modernization (OEHRM) including:

  • Ensure an independent cost estimate is conducted;
  • Reassess the cost estimate for program-related IT infrastructure upgrades and refine it as needed;
  • Develop procedures that align with VA cost-estimating guidance;
  • Ensure all IT infrastructure upgrade costs are disclosed in program life-cycle cost estimates presented to Congress;
  • Formalize agreements with OIT and VHA to identify the expected funding contributions from each entity; and
  • Establish procedures that identify when life-cycle cost estimates should be updated and include those updates in the program’s congressionally mandated reports.

OEHRM concurred with all six recommendations and provided an action plan for each one.

However, OIG said OEHRM’s sixth action plan was insufficient because it did not “address how VA will ensure updated estimates are disclosed in the program’s congressionally mandated reports.”

The OIG released a similar report earlier this year, which found VA underestimated the cost of physical infrastructure upgrades necessary to undertake IT upgrades by up to $2.6 billion. This discovery came just a month-and-a-half after VA officials expressed confidence in how the program was performing financially to Congress.

Altogether, the two OIG reports reveal VA could be underestimating the program’s total infrastructure costs by $5.1 billion.

On top of these two reports, a July 8 VA OIG report revealed VA’s OEHRM had “significant deficiencies” in training for the new EHR program, including in “training content, training delivery, and its ability to assess the efficacy of the training delivered.”

House Panel Sets July 21 Hearing

After the release of these recent watchdog reports, members of the House Committee on Veterans’ Affairs announced they will hold a subcommittee hearing on July 21 to discuss the recent reports and VA’s EHR modernization progress. The committee invited VA Secretary Denis McDonough to testify.

“It is clear from these reports that the cost estimate for VA’s EHRM project was vastly underestimated by the previous administration and that there are significant failures with the current staff training program,” said Chairman Mark Takano, D-Calif. “I appreciate the work of the Inspector General in identifying these issues, and I’m grateful that VA has acknowledged them and plans to offer our committee greater transparency.”

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“Based on these reports and my previous conversations with VA, I continue to have serious concerns about the management of the EHRM program – including the lack of clarity around life-cycle costs, failures in staff training, and inadequate change management practices,” said Rep. Frank Mrvan, D-Ind., chairman of the House Veterans Affairs Subcommittee on Technology Modernization.

“Our subcommittee hearing later this month will aim to better understand the current status of the project, the changes that must be made, and VA’s plan to move forward to ensure that all veterans can access the care they need,” he said. “We look forward to Secretary McDonough’s response and testimony on these significant issues.”

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Grace Dille
Grace Dille
Grace Dille is a MeriTalk Staff Reporter covering the intersection of government and technology.
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