Major government contractor Leidos and software vendor Cerner Corp. have been awarded a multi-billion dollar contract to provide the U.S. military with a commercial-off-the-shelf electronic health records system, beating two other finalist teams that included vendors Epic Systems and Allscripts.

The winning team also includes consultancy Accenture and dental software vendor Henry Schein. The contract, with a ceiling of a little more than $4.3 billion, has a two-year initial ordering period, with two 3-year option periods and a potential two-year award term—which, if exercised—would bring the total procurement to 10 years. The overall value of the contract was not disclosed by the Pentagon in its announcement, but had been previously estimated at $9-11 billion by defense acquisition officials.

Cerner will not comment on the contract award until it holds its quarterly earnings call on August 4.

DoD may have tipped its hand on July 10 as eyebrows were raised when the Military Health System announced it would use Cerner’s CoPathPlus anatomic pathology information system across its worldwide facilities under a separate contract.

Also See: Cerner Wins Defense Pathology IT Contact

Under the planned EHR system, part of the Defense Healthcare Management System Modernization (DHMSM) program, medical records are envisioned moving seamlessly between DoD organizations and private healthcare practitioners, providing a comprehensive real-time health record for almost 10 million service members and their families/beneficiaries.

Work will be performed at locations throughout the United States and overseas, according to DOD’s announcement. If all options in the Leidos contract are exercised, work is expected to be completed by September 2025.

“In respect for the government’s acquisition process, it would be inappropriate for us to discuss further specifics around the DHMSM procurement,” said a spokesman for the Leidos team, which says it has more than 25 years of collective experience partnering with DoD on EHR programs. “The Leidos Partnership for Defense Health is honored to have partnered with the Military Health System for nearly three decades, and we are committed to continuing our work in support of its mission to improve the health and medical readiness of our military. Our team stands ready to lean forward with the DoD to implement a world-class electronic health records system.” 

According to DoD, the procurement was a “competitive acquisition” with six bids received. Among the losing bidders was an IBM-led team that included EHR vendor Epic and a Computer Sciences Corp.-led team with EHR vendor Allscripts.

Cerner’s role will be critical to the success of the Leidos EHR solution. Cerner has been touted by Leidos as an EHR vendor that “serves more than half of the top 30 U.S.-based healthcare systems and 90 percent of U.S.-based health exchanges.”

Travis Dalton, general manager of Cerner Federal, told Health Data Management late last year that the Leidos team had an advantage over the other teams bidding for the contract in the form of provider Intermountain Healthcare, which has real-world experience implementing Cerner EHRs and would play a key advisory role on a range of issues to meet DoD specifications. With about 60 percent of military healthcare delivered in commercial hospitals, lessons learned at Intermountain would be valuable, Dalton argued.

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