A team of Leidos (NYSE: LDOS), healthcare technology maker Cerner (Nasdaq: CERN) and Accenture (NYSE: ACN) has beaten two other industry teams for the Defense Department‘s multi-year, multibillion dollar contract to integrate a commercial electronic health records system across the Military Health System.
DoD said Wednesday the contract has a $4, 336, 822, 777 ceiling value over the initial two-year ordering period with two three-year option periods and another potential two-year award term that would bring the total ordering period to 10 years.
A subsequent report by DoD News quotes Frank Kendall, Pentagon acquisition chief, as saying DoD’s latest figures estimate the cost of the new system to be around $9 billion over 18 years.
NextGov first reported the award at 3:32 p.m. Eastern time and Leidos’ stock jumped 7 percent between then and 3:45 before it closed at a 5-percent increase for the day to $40.40, which Bloomberg News says is the company’s largest one-day increase since Dec. 3, 2014.
Cerner closed up 7 percent to $73.40 and its stock also spiked after Nextgov’s report of the Defense Healthcare Management System Modernization program award surfaced.
DoD narrowed the DHMSM competition to three teams in February with bids from a group of Epic Systems and IBM (NYSE: IBM); and a consortium of Allscripts, Computer Sciences Corp. (NYSE: CSC) and Hewlett-Packard (NYSE: HPQ).
A fourth proposal from a team of PwC, DSS, General Dynamics (NYSE: GD) Google (Nasdaq: GOOG) and Medsphere was eliminated during that downselect portion of the DHMSM competition.
Six offers were submitted in total to the Pentagon for the contract, DoD said.
The Pentagon aims to have an initial replacement fielding complete at eight locations in the Pacific Northwest region by the end of next year and cover all military service branches, DoD News reports.
Kendall said the Pentagon wants the EHR system to cover close to 9.5 million beneficiaries and 205, 000 care providers once fully functional, according to DoD News.
Dr. Jonathan Woodson, assistant defense secretary for health affairs, told House lawmakers in February 2014 the Pentagon wants to achieve full functionality of the system by 2023.
DHMSM is intended as the replacement setup for the Pentagon’s Armed Forces Health Longitudinal Technology Application, inpatient Composite Health Care System and most components of the Theater Medical Information Program-Joint.
The Military Health System encompasses 1, 230 locations in 16 countries, 55 inpatient hospitals and medical centers, 352 ambulatory care clinics and more than 300 expeditionary care clinics.