The Department of Veterans Affairs (VA) Office of the Inspector General’s (OIG) investigation of the VA’s Electronic Health Records (EHR) program has found that the agency underestimated program costs by between $1 billion and $2.6 billion.

At issue, OIG says, is that VA did not have an individual cost estimate completed as policy states, and its two cost estimates significantly underestimated the cost of physical infrastructure upgrades necessary to undertake the IT upgrades.  VA’s OIG recommended that the executive director of the Office of EHR Modernization (OEHRM) make sure the department gets an independent cost estimate of the program’s full life cycle and physical infrastructure upgrades.

“Reliable cost estimates for these upgrades are imperative to ensuring that Congress has the information needed to make informed budgetary and investment decisions,” the report says. “Within VA, senior leaders depend on estimates to plan program budgets, conduct acquisition activity, and monitor program execution. For these reasons, reporting all program-related costs and ensuring cost estimates are reliably developed is critical to the program’s success.”

This report comes about a month-and-a-half after VA officials expressed confidence in how the program was performing financially to Congress. Over two-and-a-half years into the expected 10-year rollout, the EHR program has only been implemented in one of 170 sites. A review was initiated in late March, about a month after GAO called on VA to slow EHR deployment and is still in process.

VA OIG said that the lack of reliable cost estimates results from insufficient initial planning. OIG said VA was more focused on the EHR contract and the system rather than the infrastructure needed to support it. The VA staff was not aware of the need for physical infrastructure upgrades until six months after the contract was awarded, the report says.

The OIG’s recommendations also include developing a reliable cost estimate for physical infrastructure upgrades, considering costs for upgrades, and continuing to update this estimate. VA officials concurred with all the OIG’s recommendations and have set a target completion date of 12 months.

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Lamar Johnson
Lamar Johnson
Lamar Johnson is a MeriTalk Senior Technology Reporter covering the intersection of government and technology.