Rep. Matt Rosendale (R-MT), chair of the House VA Subcommittee on Technology Modernization
WASHINGTON, DC — Despite an increase in spending on information technology contracts, the number of companies that VA is relying on to build its IT infrastructure is decreasing. The department also appears to be relying more heavily on large, amorphous contracts that they can easily modify to accommodate new needs rather than go to the trouble of putting out a new contract request.
According to agency watchdogs and industry experts, this has resulted in a lack of innovation, decreased oversight and reliance on the same large companies for projects, even if previous efforts by those companies resulted in failure.
“The market is concentrating, spending is going up, while the number of companies receiving contracts are going down,” declared Rep. Matt Rosendale (R-MT), chair of the House VA Subcommittee on Technology Modernization at a hearing on the subject last month. “What you will not find in this system is much accountability. IT projects stumble … against and again. We squander valuable and limited resources because contracts are not specific enough to hold vendors accountable. Those same companies cycle through the agency year after year. Not only that, but they merge and consolidate. That’s becoming increasingly common. And if they fail at one project, they simply reappear at a different office on another project.”
There are also huge barriers in place discouraging smaller technology companies from competing for VA contracts, he added. Government contracts can be complex and time-consuming to apply for, and VA’s practice of relying on large, multiyear contract vehicles acts as a de facto “approved bidders list.”
According to a Government Accountability Office (GAO) report released last year, VA spending on IT contracts rose from $4.2 billion in 2017 to $6.5 billion in 2021. At the same time, the number of individual contracts dropped by nearly 50%.
While the growth in spending was mostly driven by the now-stalled electronic health records management (EHRM) project and COVID-19 telehealth needs, the decrease in the number of contracts was a conscious choice by the department. According to the OIG report, VA officials told investigators that they had made a concerted effort to consolidate IT requirements through the use of fewer and larger contracts. Currently, 10 contractors are responsible for 56% of VA’s IT contracting business.
“This is a common trend across the federal government. The number of companies doing business with the federal government has been decreasing significantly over the last 10 years. VA’s decrease is 25%,” testified Shelby Oakley, director of GAO’s Contracting and National Security Acquisitions team. “That makes sense in the perspective of VA’s efforts to … combine requirements for common products and services on specific contract vehicles to get the best price and save money.”
However, this simplification of contracting has come at a cost: a lack of overall IT strategy and a lack of oversight. In March, the GAO reported that IT contracting activities were often not approved by the department’s chief information officer (CIO). VA was unable to provide evidence that the CIO signed off on 39% of IT activities between March 2018 and the end of FY 2021.
“We and the [VA inspector general] have previously reported on these challenges, but they have persisted,” Oakley told the subcommittee.
Not only do these large, sprawling contracts prevent smaller companies from competing, they are not best practices when it comes to building IT infrastructure, explained Hana Schank, a senior adviser with New America, a technology think tank.
“The private sector is not building stuff like that anymore,” Schank told legislators. “It’s not a giant waterfall process with a big bang turn-on date. Everybody has learned that the way you build tech successfully is you chunk it up into small individual pieces and then build incrementally.”
While these best practices might seem obvious to people in the IT field, government leaders could be unaware of them due to a lack of in-house technology expertise.
“Because government has outsourced this tech for so long, there’s a real lack of tech fluency,” Schank declared. “Most agencies, almost all, are very thin with top senior people who have some degree of tech fluency. A large part is that information technology has only really evolved in the last 20 years. If you’re someone who’s interested in going into government, you’re a policy person. You know about policy and law, and you might not know about technology. But the world has changed.”
