Military Health IT Modernization: What Lies Ahead – Part 2

By Toné Mason, DOD Senior Analyst

As I discussed in my blog last month, health technology and health services continue to represent a significant part of DOD spending, requiring acquisition planning to keep pace. With limited funding and enterprise contracts essentially status quo through 2020, agency executives are encouraging vendors to prepare now for 2021.

At the recent 2019 Defense Health Information Technology Symposium, Tom McCaffery, Principal Deputy Assistant Secretary of Defense for Health Affairs noted that the Military Health System (MHS) is a $50+ billion per year military medical enterprise, with 51 hospitals, 424 medical clinics and 248 dental clinics worldwide. As a health benefits program, it covers 9.5 million lives, almost 800,000 network providers, with over 60% of care purchased from civilian sources. McCaffery estimated that MHS spends $1 of every $10 budgeted to the DoD each year.

The Defense Health Agency, the organization MHS falls under, is making use of a variety of acquisition approaches. During an acquisition plenary session, attendees were addressed by Pat Flanders, the Defense Health Agency’s Deputy Assistant Director Information Operation (DAD IO) and Chief Information Officer (CIO). Also participating in the session was John Tenaglia, Deputy Assistant Director for Acquisition.

The acquisition approaches in use by DHA include:

  • Commercial Solution Opening
  • Other Transaction Authority (OTA)
  • Small Business Innovation Research (SBIR)
  • Section 804 Middle Tier, and
  • Challenge (Accelerators)

Overall, DHA is assessing acquisition processes to better engage industry and to standardize cost models, evaluation processes and methods. DHA aims to streamline and focus on what’s most important to the agency. This includes such areas as organizational conflict of interest (OCI), in which the agency intends on taking a disciplined, structured and forward-looking approach to ensure that federal contract work can be handled in an objective way, and without unfair competitive advantage.

In terms of contracting, everything at the agency remains status quo through FY2020, so Flanders and Tenaglia stresses that vendors have “all their ducks in a row” before reaching out to the agency. Moving forward, military treatment facilities will have dedicated contracts divisions, and money will first go through the services. The agency is still determining scope for the new IDIQ for Commodity Services. And as far as DHA cyber work is concerned, most is being outsourced to SPAWAR.

While FY2020 has just begun, it’s not too soon for vendors to start thinking through their strategies and plans for FY2021.


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About Toné Mason
Toné Mason is a Senior Analyst on immixGroup's Market Intelligence organization. She has a B.A. in Government and International Politics from George Mason University. Prior to joining, Toné was a Business Development Intelligence Analyst at Chenega Corporation and previously a Research Analyst at Deltek working on their GovWin product.

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