How DHA plans to end Leidos’ run as the military's health record integrator

The Defense Health Agency plans to award five sole source contracts with the providers of the underlying technologies that feed into the military's electronic health record, representing a move away from working with a single lead integrator.

DHA will take on those integration responsibilities currently held by Leidos, which won the contract in 2015.

Leidos has been the lead integrator for rolling out the Cerner electronic health record and the Henry Schein dental record, among other technologies, as part of a system of systems known as MHS Genesis.

The single-award approach helped DHA to rapidly deploy the system.

But problems have arisen “as the system has reached full deployment and transitioned into the sustainment and optimization phase," DHA said in a Tuesday Sam.gov notice on its sole-source plan.

These problems included reduced cost transparency, duplicative layers of management and administration, limited government visibility into pricing structures, and constraints on the government’s ability to directly manage performance and enforce service level agreements.

DHA sees the new model as helping it buy directly from solutions providers and reducing reliance on integrators. The agency believes the new approach will improve overall acquisition efficiency.

The five sole-source contracts are with the providers of the underlying technologies for MHS Genesis:

• Oracle Health (Oracle acquired Cerner in 2022)
• Philips North America (tele-critical care provider)
• American Well Corp. (telehealth)
• Henry Schein (dental records)
• Solventum Health Information Systems (formerly 3M Health Information Systems, a provider of clinical documentation and coding)

The agreements include critical system components, software licensing, and specialized services.

DHA plans to transition Philips and Amwell away from Leidos’ management by the end of July this year, then Oracle Health will transition to its prime role by November. Henry Schein and Solventum will follow suit by July 2027.

“By establishing direct, sole-source contractual relationships with the current proprietary solution providers now, the government stabilizes the core platform, preserves the unified federal baseline, and eliminates the legacy solution provider integrator's pass-through costs,” DHA wrote in its notice.

DHA said it will introduce full-and-open competitions for services layers, but not the platforms themselves.

The proposed sole-source contracts follow three years of market research efforts that ran from 2023 to early 2026. The sole-source contracts will not exceed five years and be structured as firm-fixed price, outcome-based.