Executives from Cerner and Leidos commented on their team's recent win of the Department of Defense's contract to modernize its electronic health record system, EHR Intelligence reports (Murphy, EHR Intelligence, 8/5).

Background

Last week, DOD awarded the Defense Healthcare Management Systems Modernization contract to a team comprised of EHR vendor Cerner, Leidos, a government systems integrator, and Accenture Federal.

The initial two-year contract is worth $4.3 billion. There are two additional three-year option periods and a potential two-year award term, which could bring the contract period to 10 years valued at about $9 billion.

DOD officials said the system will be deployed at about 1,000 sites in the U.S. and abroad, including the DOD's 55 hospitals and more than 600 clinics.

Christopher Miller, the Defense Healthcare Management Systems program executive officer, in a release, said that the new EHR system will replace up to 50 legacy systems, each of which has its own transition plan.

Therefore, officials said the system will be implemented over six or seven years. Officials said they will begin deploying and testing the system at eight military facilities in the Pacific Northwest, which are expected to be up and running by the end of 2016 (iHealthBeat, 7/31).

Cerner's Comments

During an earnings call on Tuesday, Cerner President Zane Burke said the team is "honored, humbled and excited" to be awarded the contract (Versel, MedCity News, 8/4).

Burke said the contract would give the company the opportunity to have its "suite of integrated solutions ... replace DOD's legacy health IT system in its 55 hospitals and more than 350 clinics worldwide, as well as in ships, submarines and other locations in the theater of military operations."

He noted that the company is prepared to meet the contract's staffing requirements and has a globally deployed team in place to support the project. 

Burke also said the contract would not negatively affect the company's current clients. He noted, "We believe this is a positive development for our clients, and they should have confidence that Cerner will continue to execute to meet all of our current and future commitments" (Jayanthi, Becker's Health IT & CIO Review, 8/4).

Cerner did not disclose how much of the contract value it would receive to fulfill its role as the core EHR supplier. However, the company did note the contract is not expected "to have a material impact on bookings, revenue or earnings in the near term since the project will have several phases and will start with a small initial rollout."

Leidos' Comments

While releasing it second quarter financial results on Wednesday, Leidos, which is leading the DOD project, also commented on the contract award.

Leidos Chair and CEO Roger Krone called the decision "an important milestone" for the company and expressed confidence that it will continue to serve the needs of its customers. He said, "We look forward to continuing our long and distinguished history of supporting the Military Health System and enabling the DOD to execute their missions" (EHR Intelligence, 8/5).