Department of Veterans Affairs oversight body highlights $2.6B IT overspend

The Department of Veterans Affairs underestimated the cost of “physical infrastructure” upgrades in its electronic health record modernization program by as much as $2.6 billion, the department’s inspector general found.

The massive modernization program is in year three of its 10-year timeline with a projected $16 billion price tag. But those costs might increase due to physical infrastructure needs the VA hadn’t initially planned for — things like electrical work, cabling, and ventilation that allow IT infrastructure upgrades to properly function.

“The lack of reliable cost estimates was caused in part by insufficient planning at the outset of the program. [Office of Electronic Health Records Modernization] leaders stated that at the beginning of the program the focus was on the EHRM contract and the system itself, rather than infrastructure,” the report stated.

The program is designed to be a complete overhaul of the VA’s health IT system, with a new cloud-based system from Cerner hosting billions of medical records and supporting all new interfaces for medical staff. The goal is to eventually integrate the VA’s system with a similar digital medical system the Department of Defense is migrating to so service members separating from the military can seamlessly transition to veteran care.

Lawmakers have been critical of the VA’s potential to go over budget and schedule, a concern shared by new VA leadership. The VA twice had to delay the launch of the new system at the first launch facility in Spokane, Washington; one of those delays was caused by the pandemic. Since the EHR’s launch, lawmakers have highlighted instances where the tech has had negative medical impacts, like delayed prescription refills.

The OIG found several missteps and a lack of thorough review to be at fault in VA’s underbudgeting. The department did not seek an independent review of its cost estimates, in violation of its own financial policies, the IG said.

“An independent cost estimate is a complete and fully documented estimate that external or third parties develop and use to test the reasonableness of the program cost estimate,” the report stated. “Thus, it likely would have revealed many of the issues found during this audit and would have allowed VHA to take earlier action to improve the reliability of its estimates.”

One of the most underestimated costs was the price of replacing cabling nationwide. Despite VA leadership signing memos instructing the replacement of cabling, the nearly half-a-billion dollars cost was not included in estimates.

“[N]ationwide cabling costs should be included as part of the cost estimate because upgraded cabling is required prior to full system deployment,” according to the report.

The VA has steadily increased its IT budget requests in the past several years to account for more than just the EHR requirements. In 2020, then-Secretary Robert Wilkie told Congress the VA is playing catch up after years of neglect in its tech systems.

“I will admit that VA has been underfunded on the IT front through the past several decades,” Wilkie told members of the House Veterans’ Affairs Committee. “We were right at the bottom.”