The Department of Veterans Affairs (VA) needs to transition away from large, “monolithic” contracts to smaller, outcome-focused contracts to better serve itself and veterans, according to House subcommittee members and acquisition experts.


At a House Committee on Veterans’ Affairs Technology Modernization Subcommittee hearing today, lawmakers and witnesses agreed that the VA’s current, large-scale IT contracts are not working for the agency nor veterans.


“To put it simply, the market is concentrating, spending is going up, and the number of companies receiving the contracts is going down,” Chairman Rep. Matt Rosendale, R-Mont., said. “The VA is not unique in this respect, but as one of the largest IT buyers in the Federal government, it’s a striking example of how the system operates.”


According to the Government Accountability Office (GAO), from 2017 to 2021, VA’s total IT contract obligations increased by more than half, with large technology efforts such as the agency’s Electronic Health Records Modernization (EHRM) program and the COVID-19 pandemic response driving the majority of this growth.


At the same time, Shelby Oakley, GAO’s director of contracting and national security acquisitions, told lawmakers that the number of contractors receiving awards dropped by more than 25 percent. She explained this is likely due to VA awarding 50 percent fewer new contracts during the same time.


Oakley also referenced a recent GAO report that revealed that the agency did not get the approval of its chief information officer (CIO) for many IT contract awards from fiscal year (FY) 2021. 


“As such, we recommended the VA implement an automated reminder for contracting officers to obtain the CIO approval for IT procurements,” Oakley said. “This should ensure that VA’s CIO has the opportunity to provide input on current and planned IT acquisitions and help avoid awarding contracts that are poorly conceived or duplicative.”


With VA’s current IT contracting system, Chairman Rosendale argued that there’s not much room for keeping contractors accountable.


“What you will not find in this system is much accountability,” he said. “This is why IT projects meant to modernize how services are delivered to our veterans stumble again and again. They’re rewarded with the change orders that enrich vendors while squandering valuable and limited resources because contracts are not specific enough to hold vendors accountable.”


Hana Schank, a senior advisor at New America, agreed and recommended the VA move away from indefinite delivery, indefinite quantity contracts to smaller, outcome-focused ones.


“In these contracts, there are no outcomes that are specified,” Shank said. “In government, delivering the product is the end. You don’t have to deliver it well, you don’t have to deliver it in a way that improves accessibility. In the private sector, there are metrics that you would use to say, ‘Did this achieve our goals?’ But in government, the goal is very often just launching the system and not how well it performs and what the outcomes are.”


“These giant monolithic contracts will never succeed and they will never serve veterans or the VA,” Shank added.


Shank explained that while big IT contracts may have worked in the 1990s, the private sector has moved on from this “giant waterfall process with a ‘Big Bang’ turn-on date.”


“Everybody has learned that the way you build tech successfully is to chunk it up into small individual pieces and then build incrementally,” she said. “So, the first piece is not writing these giant contracts – which is going to allow more vendors to compete, but also is the right way to build technology.” 


The other piece, Shank said, is that because the government has outsourced its IT work for so long, “there’s a real lack of tech expertise and tech fluency.” She explained that until the Federal government has a digital-ready workforce with a technical skill set, “these contracts are just going to continue.”


While VA representatives were not present for the hearing, Chairman Rosendale said he hopes the VA will provide “the best-qualified witnesses upon request when we resume this discussion of this topic in the future.”


“Competition in contracting is a positive thing, and we need to incentivize this at the VA,” added Ranking Member Sheila Cherfilus-McCormick, D-Fla. “Where dollar amounts have increased, they have continued to see poor performance. Employees, veterans, and members of Congress have had enough with the current lack of success, and I look forward to working together to ensure we have more positive outcomes in the future.”

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Grace Dille
Grace Dille
Grace Dille is MeriTalk's Assistant Managing Editor covering the intersection of government and technology.