Deficiencies in Reporting Reliable Physical Infrastructure Cost Estimates for the Electronic Health Record Modernization Program

To promote compatibility with the Department of Defense’s electronic health record system, VA is replacing its aging record system. This requires VA medical facilities to upgrade their physical infrastructure, including electrical and cabling. The OIG determined from its audit that the Veterans Health Administration’s (VHA) cost estimates for these upgrades were not reliable. VHA’s estimates did not fully meet VA standards for being comprehensive, well-documented, accurate, and credible. The audit team projected that VHA’s June and November 2019 cost estimates were potentially underestimated by as much as $1 billion and $2.6 billion, respectively. This was due in part to facility needs not being well-defined early on. The estimates also omitted escalation and cabling upgrade costs and were based on low estimates at the initial operating sites. Because cost estimates support funding requests, there is risk that funds intended for other medical facility improvements would need to be diverted to cover program shortfalls. The Office of Electronic Health Record Modernization (OEHRM) also did not meet its obligation to report all program costs to Congress in accordance with statutory requirements. Specifically, OEHRM did not include cost estimates for upgrading physical infrastructure in the program’s life cycle cost estimates in congressionally mandated reports. Although VHA provided OEHRM with an approximately $2.7 billion estimate for physical infrastructure upgrade costs in June 2019, OEHRM did not in turn include them in life cycle cost estimate reports to Congress as of January 2021. OEHRM stated it did not disclose these estimates because the upgrades were outside OEHRM’s funding responsibility and that they represented costs assumed by VHA facilities for maintenance—including long-standing needs. VA concurred with the OIG’s five recommendations and in its comments to the report agreed that the costs associated with these upgrades will be transparently disclosed to Congress.