The cost of Oracle’s extended EHRM contract with the Department of Veterans Affairs disclosed. The ten-year contract for the EHR Modernization (EHRM), originally due to expire in May 2028, was extended earlier this month by three years to May 2031 and, we now know, an additional $17 billion was added to the ceiling. The full contract for Oracle will total by May 2031 $26.94 billion. The original contract was just under $10 billion–a cost ceiling expected to be reached by end of 2026.
Background: Oracle’s current VA contract 36C10B18D5000, the Electronic Health Record Modernization Indefinite-Delivery/Indefinite-Quantity (IDIQ) contract with Oracle Health Government Services, the successor to Cerner Government Services, originally was structured with a 10 year base period without annual renewals. This started in May 2018. In early 2023, the contract was renegotiated. The base period was halved to five years with the remainder of the contract subject to annual renewals from May 2023 and expiring 10 years after the contract start, in May 2028. The Modification P00008 to the IDIQ contract adds another three one-year firm fixed-priced optional ordering periods, taking the duration of the contract to May 2031.
According to the released contract modification documents, VA projects that the original ceiling would be reached by Q1 in Federal FY 2027, which is between October and December 2026. The rationale is that “Due to unanticipated complexities in deploying this system, extensive site-specific customizations, as well as the other factors … VA has reached the current contract ceiling sooner than originally planned. VA anticipates using the remaining ceiling by the first quarter of fiscal year 2027 and thus requires an increase.”
“Building upon the Trump Administration’s successful deployment of VA’s new electronic health record system at several VA facilities, VA and Oracle Health agreed earlier this month to renew their collaboration,” VA spokesperson Quinn Slaven previously said in an emailed statement to FedScoop.
As previously noted in our original article [TTA 12 Aug], in this Editor’s view, the three-year extension is a smart move on the VA EHRM team’s part.
- The obvious one is that the VA EHRM rollout requires another three years from 2028 to 2031 to fully cover all locations. Releasing the main single-source contractor three years prior to its finalization is not an intelligent move unless another EHR company could take it up–and that has not happened. Things apparently are going smoothly in the newly formatted rollout. It was also obvious that the cost ceiling had to be increased.
- The other is protection. Now you won’t read this elsewhere. Since the late winter, Oracle was rumored to be interested in selling, wholly or in part, Oracle Health AI (OHAI). Oracle Health sale rumors were confirmed this summer. In the event of a sale, the buyer would be obligated to honor the VA contracts and its terms.
- The other possibility is if disaster strikes Oracle as a result of their AI landlord strategy, such as bankruptcy, the VA has some contractual protection in a Federal court.
VA Indiana’s three-hospital system (Fort Wayne, Marion, and Indianapolis, VISN 3) cut over to the Oracle EHR on 22 August. X announcement (@VAIndyHealth) The last two scheduled for 2026 will be Anchorage, Alaska (VISN 5) and Cleveland, Ohio (VISN 3) on 24 October.
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