The Department of Veterans Affairs is trying out a new concept for IT acquisition. Rather than paying vendors to build systems according to rigorous government specifications that might, one day, meet the agency’s mission, it’s offering cash prizes to any vendor who can prove their product successfully integrates with its electronic health records system.

The system, VistA, is used to manage patient records throughout the VA healthcare system and in some private-sector hospitals. In 2011, the department released the entire system into the open source software world, committing that VistA and any improvements VA made to it would be freely available to the public.

But VA still needs to upgrade and modernize major components of VistA, such as the system’s scheduling module. So it’s offering up prizes worth $3 million to developers who can deliver one that’s compatible with the open source version of VistA.

“It’s a different way of doing acquisition for us,” said Roger Baker, the department’s assistant secretary for information and technology. “It greatly reduces what we’re buying, and it greatly increases the selection that we have.”

VA last tried to upgrade the scheduling system four years ago through a traditional IT acquisition process. But it didn’t work. The department spent more than $100 million developing requirements and procuring the new module, and never got a usable result.

Three prizes up for grabs

This time, it’s making available three prizes to any vendors who can deliver a product that’s compatible with VistA and meets the department’s testing requirements. A prize, however, is not a guarantee that VA will use the product. The department still will have to go through a formal acquisition to determine which one to buy but, theoretically, it’ll be selecting from existing products that are known to work, rather than specifying requirements on the front end and paying a vendor to build something from scratch.

“We really like the prize idea,” Baker said. “Because I can picture vendors out there that wonder whether or not they want to get involved with the open source. When you put a $3 million prize out there, it’s much easier for, let’s say their director of engineering, to come in and say, ‘Look, I can make our scheduling package compatible with the open source, the prize will cover a lot of my costs to do it, and then we get to compete to sell them a license to our package for 153 VA facilities, and who knows how big that’s going to be.'”

Baker said one firm already has submitted a successful candidate for the prize. Ultimately, he expects more applicants to participate than there are prizes available. It’s still unclear how well the prize system will work but, Baker said if it does, the implications are huge for reducing government IT development costs.

“Nobody’s done this before inside of government, and we’re looking to really see how this works. But the risk reduction here is incredible,” he said. “If I know that there are four scheduling packages that already work with VistA, and all I’ve got to do is figure out how to choose amongst them, I don’t have to worry about spending $127 million and getting nothing out of it anymore. That’s a dark blot on VA’s software development history, but it’s a fact. And boy, I want to stay as far away from that as far as I possibly can.”

Lowering the risk of development

The prize concept, if it works as intended, could be used for other aspects of the health record system, including the joint VA-DoD effort to build an integrated health record system, Baker said. The idea could eventually get used for other huge IT projects like the Veterans Benefits Management System, the paperless claims system VA is currently rolling out across the country.

“I would ask why I wouldn’t eventually make VBMS an open source platform too, and start letting people interface their automated decision tools, for example, and selecting those to run inside VBMS. I think the combination of open source and prizes has some incredible implications for getting government out of the business of bearing the sole risk of development to its requirements, and also getting government out of defining its requirements in such a unique way that nobody else uses them,” Baker said.

But for now, VBMS, the claims system, is suffering through some hiccups. The project, which is VA’s effort to speed up veterans benefits claims by eliminating the mountains of paper involved in the current claims process, hit a snag in December when the department deployed it to 18 of its regional offices. Users were suddenly confronted with huge performance issues on the system.

“The mistake we made was introducing another system, the phone call center app on the same infrastructure at the same time,” Baker said. “We wanted to make sure the claims people are seeing the same data that our phone service people are seeing and telling the veteran about. Inefficiencies in that system collided with VBMS, but in late December we separated them out entirely. We’ve had no performance issues on VBMS since then, but we’ve continued to have some performance concerns on the call center platform. But VBMS is performing well. We’re going to start adding some more offices on in February.”

VA plans to have the system deployed in all its claims offices by December. Where it’s installed, new veterans claims will be handled completely electronically. Existing claims will be handled and closed out on the old paper system.

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